[api]

A few things I've learned:

1. SAFEs are convenient if everyone is amenable, but be careful about having SAFEs sitting around too long or with different terms. They're like the Mogwai in the Gremlins films. They're kind and cuddly unless you feed them after midnight or get them wet.

2. Stay in touch with your angels even if they don't initiate. It'll help in tons of ways and they can interpret lack of contact as a sign that you're dying and that they shouldn't think about you anymore. This isn't good.

3. Be careful about any terms (e.g. in side letters) that might allow someone to stand in the way of a priced round in the future. Even if someone doesn't use them to play hardball for terms (they can), it might make things inconvenient and add dangerous delays.

4. Have a lawyer look things over BEFORE you get into priced round negotiations with VCs or you might end up dragging the process out and risking losing the deal because the lawyers find a problem that needs fixing.

5. If you use standard/canned documents, check (3).

Generally all this boils down to: keep terms simple and universal as much as possible, be communicative, and don't let things sit too long.

It's possible to do a priced round without a lead if you have SAFEs/notes sitting around too long. You can use standard documents to minimize legal. It may be necessary to clean up your cap table.

[elcomet]

> 1. SAFEs are convenient if everyone is amenable, but be careful about having SAFEs sitting around too long or with different terms. They're like the Mogwai in the Gremlins films. They're kind and cuddly unless you feed them after midnight or get them wet.

Your analogy is funny but you don't actually explain why SAFEs are dangerous, could you develop?

[api]

If you have SAFEs with different terms the calculations for your cap table can become onerous and complicated and confusing.

If things get confusing some SAFE holders might feel like they're getting a worse deal than others, which can cause acrimony on your investor team.

If they sit around too long the risk of these things increases. SAFEs are so easy someone can offer to invest and you say yes and BAM you sign one... without bothering to carefully look over all previous SAFEs etc. and make sure terms are in line with expectations. They're almost too easy to execute.

My analogy came from the fact that if you have these problems you can get a complexity explosion during the next priced round.

KISS (Keep It Simple Stupid) is really the TL;DR.

[aliyeysides]

Isn't this really an issue with SAFEs that have pre-money terms? Genuinely asking bc idk. I thought post-money SAFEs kinda solved for this. Less favorable for the founder, but far less complex when dealing with multiple investors.

[gumby]

No, both get their pain from different discount rates.

I was sorry when SAFEs switched to post money -- it was a power play for the investors.