Business & Corporate
What is the difference between a SAFE and a convertible note?
An angel investor wants to invest in my startup using either a SAFE or a convertible note. What is the practical difference?
Asked anonymously · 1 month ago · Washington, US
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358 views · 1 answers
1 lawyer answer
Both are ways to raise early money that converts into equity later, usually at a future priced round. The main differences:
- A convertible note is debt: it typically has an interest rate and a maturity date when it could become repayable.
- A SAFE is not debt: it generally has no interest or maturity date.
Both often include a valuation cap and/or discount. Pay close attention to how multiple instruments will dilute founders when they convert.
This is general information, not legal advice — speak to a licensed lawyer about your situation.
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