Understanding SAFEs and Priced Equity Rounds by Kirsty Nathoo

TL;DR

This video explains SAFEs (Simple Agreements for Future Equity) and their impact on founder dilution through a company’s lifecycle from incorporation to a priced Series A round. The core message is that founders must actively track how much of the company they have sold via convertible instruments, because dilution from SAFEs can lead to unexpectedly low ownership by the time a priced round closes

Key insights

• A SAFE is not debt; it has no interest rate or maturity date (unlike convertible debt).
• Post‑money SAFEs are designed to make dilution easier for founders to calculate: ownership = amount raised / post‑money valuation cap.
• In a priced round, the order of operations for a company with post‑money SAFEs is: (1) SAFEs convert to shares, (2) option pool is increased (typically to 10% of post‑money shares), (3) new investors