Carolynn Levy and Kirsty Nathoo - Startup Investor School Day 1

TL;DR

The video teaches angel investors how to use Y Combinator’s SAFE (Simple Agreement for Future Equity) to invest in early‑stage startups. Carolynn Levy and Kirsty Nathoo explain that a SAFE is not a loan, has no interest or maturity, and converts into shares at a future priced round, with the valuation cap being the key term that rewards early investors.

Key insights

• The SAFE is a five‑page document with only two negotiated terms: the investment amount and the valuation cap (or discount rate). It is not debt and does not accrue interest.
• The valuation cap is not a current valuation; it is a mechanism to reward the investor for taking earlier-stage risk. The investor’s return depends on how much higher the next priced round’s valuation
• If a company already has convertible promissory notes from earlier investors, the SAFE is not recommended; using the same note is simpler and fairer.