SAFE, Convertible Note, or Priced Round?

Hi ,

Early-stage fundraising is full of hard choices.
But here’s one every founder raising capital eventually faces:

“Should you raise on a SAFE, a convertible note, or go straight to a priced round?”

You’ll hear “SAFE” and “convertible note” used interchangeably, like they’re the same thing.
They’re not. And priced rounds? That’s a whole different play.

If you’re a founder navigating these options, this one’s for you.

Let’s break it down.

1. SAFEs (Simple Agreements for Future Equity)

Think of a SAFE as a lightweight handshake:

“Here’s money now. Give me shares later, once you set a valuation.”

• No interest

• No maturity date

• No obligation to repay

• Include a valuation cap and/or a discount

• Not debt

• Not equity (yet)

Why founders love SAFEs:

• Fast to close, low legal cost

• Widely accepted by angels, accelerators, and early-stage VCs

Why investors might hesitate:

• Less control

• No fixed timeline for conversion

• No guaranteed return if things stall

Best for:
Early-stage raises with friendly, fast-moving angels or funds who trust you to keep building.

2. Convertible Notes

Convertible notes are debt that wants to become equity, but still behaves like a loan until it does.

• Earns interest (typically 2–8%)

• Has a maturity date (often 12–24 months)

• Includes a valuation cap and/or a discount

Why founders sometimes choose notes:

• Some investors prefer structure

• Maturity date creates urgency for your next round

Why notes can be stressful:

• They must convert by a deadline, or be repaid, which means,

• If your round takes longer than expected, you could be stuck negotiating extensions

• Not ideal if your path to the next round is unclear or long

Best for:
Founders with a short, confident timeline to raise again — or investors who want downside protection.

3. Priced Rounds

A priced round is the “real deal” — you're selling equity at an agreed valuation today.

This means:

• A full legal round (termsheets, shareholders agreements, etc.)

• A fixed valuation, ownership % agreed at close

• Usually requires a lead investor

Why founders might go priced early:

• You have serious traction, big cheques, or need institutional money

• You want clarity around ownership and dilution now

Why it’s not always the best move:

• Takes longer and costs more (think ~$10K+ in legal fees)

• Locks you into a valuation before you’ve fully proven it

• Harder to herd multiple investors into that valuation

Best for:
Seed or Series A rounds, or startups with significant revenue, momentum, or lead investor interest.

How to Choose

Let’s be blunt:
This isn’t about the perfect structure. It’s about what gets you funded fast with minimal friction.

Ask Yourself:

• Do I have a lead investor setting terms? → Consider a priced round

• Am I raising from multiple angels or small cheques? → SAFEs will keep it cleaner

• Are my investors more traditional or want downside protection? → Convertible note might be the smoother path

• Is this my first raise, with limited traction? → SAFEs are your friend

And if you’re getting feedback from investors preferring a different instrument than your current plan?

Don’t die on this hill.
Pick the path that keeps momentum moving.

Final Thought

We see hundreds of pro-planet founders navigate this decision every year.
Here’s what we tell them:

• Don’t over-engineer your first round. SAFEs can often be the quickest path to early traction

• Notes can work — just plan ahead for that maturity cliff

• Priced rounds are great with a strong lead and validated traction

But above all…

You’re not choosing between good and evil here.
Brilliant ventures have all been backed using different instruments; SAFEs, notes, and priced rounds.

Pick one. Execute fast.
And get back to solving the problem you set out to fix.

And if a SAFE, Convertible, or Priced Round Doesn’t Feel Quite Right…

There is another option.

The Raaise SAFE
A next-gen instrument, built for optionality.

It takes the simplicity of a standard SAFE and adds flexibility where it counts.

Fast to close. Easy to manage. With the option to share upside through revenue — if and when it makes sense.

No maturity date. No pressure to chase unicorn status. Just a smarter way to raise capital that fits the kind of company you’re building.

Still want the option to scale fast, or exit? It’s there.
Prefer to grow steadily and return capital sustainably? That works too.

If a traditional SAFE feels too rigid, convertibles too risky, and you’re not quite ready for a priced round — this might be the alternative you didn’t know existed.

Curious? Drop us a line at [email protected].

Here’s to raising capital on your terms.

Amy and the Team @ Raaise

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