MFN Clause (Most Favored Nation)
A clause ensuring a SAFE investor gets terms at least as good as any later SAFE investor.
Definition
An MFN (Most Favored Nation) clause in a SAFE gives the investor the right to adopt the terms of any subsequent SAFE that has better terms. If a company issues a later SAFE with a lower valuation cap or higher discount, the MFN investor can amend their SAFE to match. This is common in the earliest SAFEs when no valuation cap has been set yet.
Why it matters
MFN clauses protect early SAFE investors but can surprise founders. If you raise a later SAFE at a lower cap, every MFN SAFE automatically gets the lower cap too, increasing dilution more than expected.
Example
An angel invests $100K on a SAFE with MFN but no cap. Later, the company issues SAFEs at a $6M cap. The angel can amend to the $6M cap, ensuring they convert at the same favorable price as later investors.