Raise money
Valuation, SAFEs & term sheets
Understand the paper before you sign it.
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How do stacked SAFEs at different caps convert into a mess at my priced round?
Every SAFE you sign at a different cap converts to equity at the priced round, and if you've raised on three or four caps over 18 months you can en...
What is a liquidation preference and how can a 1x participating clause quietly gut my exit?
A liquidation preference decides who gets paid first when you sell, and a 1x non-participating preference (investor gets their money back OR their ...
An investor wants a pro-rata right. What am I giving up and is it standard?
A pro-rata right lets the investor put more money in at your next round to keep their ownership percentage, and for a serious early backer this is ...
What does a board seat in my term sheet actually let the investor do?
A board seat gives the investor formal voting power over major decisions (budgets, hiring the CEO, selling the company, raising the next round), wh...
How big should my ESOP pool be, and why does the term sheet always want it carved out pre-money?
Investors almost always ask you to create or top up an ESOP pool (often 10 to 15 percent) before the money goes in, which is the option pool shuffl...
What is an MFN clause in a SAFE and how can it come back to bite me?
A Most Favored Nation clause lets an early SAFE investor automatically get the best terms you give any later SAFE investor, so if you raise the nex...
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