Skills · by @omeedtabiei

SAFEs Explained — Valuation Cap, Discount, and How They Convert

Explains how SAFEs work for pre-seed founders raising their first round. Covers what a SAFE is, how valuation caps and discounts work, conversion math at a priced round with worked numerical examples, what pro-rata rights mean, what's typical at each stage, and what to negotiate.

What this skill walks you through

1. SAFEs Explained — Valuation Cap, Discount, and How They Convert
2. Purpose
3. Trigger Phrases
4. "Can you explain how a SAFE works?"
5. "We're raising on a SAFE — what should the valuation cap be?"
6. "How does a SAFE convert when we raise our seed round?"
7. "Should we use a valuation cap or a discount rate?"
8. "What happens to our ownership when the SAFE converts?"

Sourced from SAFEs Explained — Valuation Cap, Discount, and How They Convert by Conversational Creation.

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