a convertible bond is a maturity date at which, if the conversion does not take place, the entity returns the amount of the investment to the investor, but not a SAFE; a convertible loan with interest, but not a SAFE; and a convertible note identifies the minimum amount of funds to be included in equity financing, but not a SAFE. SAFE bonds are convertible bonds, which means they can eventually be converted into equity. To understand how they work and what needs to be added to the agreement, you need to be aware of the following conditions and considerations: dilution and ownership values were an informed decision rather than a safe calculation. That`s why security tickets were created based on money. Thus, to assess dilution and ownership, you must remove the theoretical increase in shares and take into account the convertible bonds issued. Basically, what you are doing here is calculating the price per share, which converts the SAFE investor`s money. This is a simple divisional problem where the valuation ceiling is divided by corporate capitalization. A safe is simple and short. It saves you the trouble of negotiating and agreeing on the amount of equity financing, which is often quite difficult to reconcile between the investor and the business at an early stage of the business.
In the Zegal app, you have four ways to convert SAFE into preferred shares for equity financing: A major drawback is that post-money-SAFe holders would not participate in a dilution of future financing cycles until SAFE notes are redirected after the money into a price investment round. Because this dilution has to go somewhere, it is carried by the founders and the first employees. And so it seems that every SAFE investor after the money would receive a better offer than most holders of chests that are not based on money. 1) the preferred share price to offer for equity financing; 2) the preferred share price that must be offered with a discount for equity financing; 3. the price per share determined by a pre-negotiated valuation ceiling (see below); or four. Option 2 or Option 3 below.