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In addition to the general misunderstandings that can occur, some of the common pitfalls when using a SAFE include:

  • Providing a discount that is too steep . While there’s no hard and fast rule about how much of a discount you may offer your investors, the typical range tends to be between 10-20%, though 5% and 30% are not unheard of. The danger here is that if you provide too steep of a discount (say 50%), your future investors may not be pleased about an early investor tagging along with their investment and getting such a preferential conversion, depending on the comparative size of the investments and the time between investments. At best, this will be an unwanted discussion point, but at worst, it may turn away potential future investors.
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Demystifying SAFEs: The good, the bad, and the ugly | Insights | DLA Piper Global Law Firm
e who does understand, but if not, there are often disconnects between the investors’ expectations (and sometimes even the founders’ expectations) and the reality of what’s written in the SAFE. <span>In addition to the general misunderstandings that can occur, some of the common pitfalls when using a SAFE include: Providing a discount that is too steep. While there’s no hard and fast rule about how much of a discount you may offer your investors, the typical range tends to be between 10-20%, though 5% and 30% are not unheard of. The danger here is that if you provide too steep of a discount (say 50%), your future investors may not be pleased about an early investor tagging along with their investment and getting such a preferential conversion, depending on the comparative size of the investments and the time between investments. At best, this will be an unwanted discussion point, but at worst, it may turn away potential future investors. Negotiating additional terms. Having discussed the Bad and the Ugly aspects of SAFEs, it’s not surprising that many early stage angel investors may want to negotiate additional terms in


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