Fundraising Instruments

SAFEs, convertible notes, preferred stock, and the legal structures that govern funding.

12 terms

Beginner

SAFE (Simple Agreement for Future Equity)
A simple investment contract that converts to equity at the next priced round.

Intermediate

Bridge Financing
Short-term funding to bridge a gap until the next major financing event.
Conversion
When a SAFE or convertible note transforms into actual equity shares at a priced round.
Convertible Note
A loan that converts to equity at the next funding round, with interest and a maturity date.
Discount Rate
A percentage discount SAFE or note investors receive on the share price in the next round.
Interest Rate (Convertible Note)
The annual rate at which a convertible note accrues interest, adding to the amount that converts.
Maturity Date
The deadline by which a convertible note must either convert to equity or be repaid.
Post-Money SAFE
A SAFE where the valuation cap includes the SAFE itself, making dilution clearer for investors.
Pre-Money SAFE
An older SAFE format where the valuation cap does not include the SAFE investment itself.
Venture Debt
Loans to venture-backed startups, providing capital without as much dilution as equity rounds.

Advanced

MFN Clause (Most Favored Nation)
A clause ensuring a SAFE investor gets terms at least as good as any later SAFE investor.
Warrant
A right to buy shares at a fixed price in the future, often attached to debt or partnership deals.

Other categories

Definitions are intended as plain-English educational summaries. Not legal, tax, or investment advice.