
Simple Agreement for Future Equity v. Convertible Notes: Pros and Cons
Posted by Mohsen Parsa | Dec 15, 2021 | 0 Comments
A convertible note is a company debt: a loan carrying an interest rate, which converts to equity (stock ownership) upon the occurrence of a previously decided event such as the successful closing of a future investment round, or reaching a maturity date. A SAFE, in contrast, is neither debt nor equity and places no immediate financial burden on company founders. It is a fairly basic agreement between a company and an investor that gives the investor the right to purchase stock down the road at a lower rate than subsequent investors.
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