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Understanding SAFEs and Priced Equity Rounds by Kirsty Nathoo

Y Combinator 327 views

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Chapters (Powered by ChapterMe) - br00:00 - Introductionbr03:53 - SAFEsbr10:15 - Post-money SAFEsbr14:35 - Dilutionbr22:40 - Priced roundsbr27:44 - Priced round dilution mathbr41:07 - Top tipsbr42:48 - Don't over-optimizebr44:08 - Conclusion
Comment from : @chapterme

the questions always come from the dumb ones
Comment from : @nvda2damoon

Yikes, SAFE's are only for Accredited Investors! Y-combinator makes it seem like it's a vehicle for family and friends, but it is not! Paragraph 4(b)!
Comment from : @egghead55425

Thank you The folks at UC Berkley Law running a VC Certificate Program could learn to better present the topics in a theory, approach and math rather than getting all tangled up poorly designed spreadsheets
Comment from : @alexandergiguere5484

080 Schowalter Pike
Comment from : @GusJoan

Amazing explanation thank you!
Comment from : @kmaximoff

One of the best video regarding SAFE
Comment from : @AlMamun-w4h7n

SAFE notes add a lot of complexity to the cap table - they are anything but simple
Comment from : @JeffEpstein28482

thank you kirstybrbrexcellent ptesentation, I explained the math sife however I fidnlt catched legal and financial terms, maybe because I am not familiarized with options and stocks or maybe the problem is my weak english but I can feel how much important your presentation for any founder, who know maybe one day I visit YC and you explain all these things in details face to face😊brbrAll my encouragements
Comment from : @consommableechographiealge8418

Does anyone has a sheets template to model this?
Comment from : @eugenioscafati7328

What happens to employ 5 when we go to seed round and sell 10 of the company? Do they still have 5 or their equity gets reduced to 45?
Comment from : @_luka_bagdavadze

In the scenario of priced round is less than the Cap, Safe investor should enjoy a discounted valuation
Comment from : @MohamedOrikat

This is incredible! Thank you!
Comment from : @adrianwilk9368

Does anyone know how she calcualted the new issues option poll of 10 to be 1695 M shares?
Comment from : @afrococonut8018

Extremely great explanation
Comment from : @afrococonut8018

Can we say no to the safe?
Comment from : @nishantahvan

Taking notes is excruciating when the camera is constantly on her and only shows the slides for a brief second Made this video a pain to watch although it is very educational
Comment from : @aferg8587

good explanation Q: How is a Safe recorded if not a debt and not a share represented in a cap table? ie: for Benefit Corp? Typically a Benefit Corp will have a recital on the Stock certificate issued representing the Articles of Incorporation amendment after 2/3rd of stockholders elect to become a Benefit Corp This could happen after a safe was issued
Comment from : @AlanDeRossett

My take home - Do what you need to do with the money and make the company a success
Comment from : @Emmaxson

This makes a lot of sense ❤brThanks Kirsty
Comment from : @Emmaxson

welcome to my team!
Comment from : @yunhuang1841

Best explanation on SAFEs Thanks
Comment from : @Bigeinla

OMG the founders are now only at 51! That went quick! And only after series A!
Comment from : @ExplorinDoranRBrown

How can I decipher the pre-money valuation?
Comment from : @adedejijubril8048

I am confused So if a company is valued at 5 million and an investor puts in 10 mil (enough to buy the company twice) they get only 66 equity?
Comment from : @Samlowkiapeng1888

Very simple concept to understand
Comment from : @MASTERPPA

thank you!!!!
Comment from : @lucas182512

Excellent work Kirsty Totally explained it super clearly
Comment from : @charliekaru

Excellent video!
Comment from : @sambyksg2011

Great explanation Thank you
Comment from : @unankacynthia66

It can't be explained better thanks Kirsty and YC
Comment from : @Shakti_Singh_Om

In the 40:12 frame, Is the company or founder able to buy back the preferred shares sold to investors when the company is profitable?
Comment from : @RainerArencibia

In the 40:12 frame, investor's shares are listed in the preferred table instead of the common shares Why?
Comment from : @RainerArencibia

basically there is NO slide
Comment from : @q4982

Thanks Kirsty, my understanding of SAFEs significantly evolved I always thought SAFEs always get unlocked at the same valuation as the next round but TIL that there can be a valuation cap introduced
Comment from : @MegaXerk

Loved the content, thanks for sharing on Youtube
Comment from : @zhandosyembergenov1990

What happens if one would never have a prices round because the safe money is all it needed to kick off growth on its own?
Comment from : @rira12621

Clearest and most coherent explanation of this I’ve ever seen Thanks Kirsty!
Comment from : @sikhswim

Thanks for sharing Very helpful
Comment from : @louisliu6488

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Comment from : @sefacankesici9303

Just to make sure I understood: post money the meaning is after raising on priced-shares/Series A?
Comment from : @dedu15

thank you sooo much for sharing your knowledge, extremely helpful PS : Kirsty you are officially my women crush
Comment from : @sapphirequestions6080

Great presentationbrOne thing that you didn't explain and that i can't figure out is the option pool increase How did you get to 1695M?
Comment from : @elijahvdp

YC, could you share the link to the model Kirsty shared at 36:10 ?
Comment from : @ethanwei5816

Make it so complicated u get confused but it’s really not that deep just dividing and multiplying
Comment from : @Killahkron1992

Can I ask for the calculation of the 1695M shares increase in the option pool?
Comment from : @calebng9235

I really liked the explanation of SAFe, best I found so far
Comment from : @daryaslizh9911

Super!
Comment from : @benatiayaniv

Thanks for the information
Comment from : @eduardouribe6426

Great Job
Comment from : @cooltechchoi9966

Kristy is an amazing instructor ,,, great job
Comment from : @estegy

When she refers to “available files with these documents” “in our website” what does she mean? In the YC startup founder course program website?
Comment from : @UserName________

its post money SAFE why does the SAFE holder share get diluted after price round ?
Comment from : @jiangyou4475

Did anyone find the model for the increase in the options pool she talked about?
Comment from : @mertdeveci6905

Thanks Kirsty
Comment from : @xiaopinhaji8701

GREAT explanations - super helpful!!!
Comment from : @ledgerfunding9000

Good Job!
Comment from : @mdebrahimchowdhury8061

Good presentation How much the company is sold should be based on pre-money valuation? This is how the dilution effect on existing shareholders will be known Isn't it
Comment from : @hemendrakumarvarshney8825

Could someone please share how we are supposed to calculate that 1,695,000 shares for the option pool increase? I think this is an important part of the calculations we as founders need to consider but it is not being explained
Comment from : @huhdam8518

Approachable summary for new founders to understand SAFEs, thank you
Comment from : @monika615

Angel investors were the crooks to make convertible notes look cool because founders were stupid to think that something with an interest rate and discount kicker was a good thing for the company
Comment from : @bjvu9460

I like her
Comment from : @JohnWilliams-dq8pp

One of the best videos so far on this topic
Comment from : @diegooruna1305

The last q was good Founder investing: safes or loans to the company? Which is better?
Comment from : @LECityLECLEC

thanks,
Comment from : @stephanielockett7541

Shes successful, good-looking, smart, rich and a great speaker Deadly combination
Comment from : @AkshayAradhya

Well Done Kirsty
Comment from : @itsmohdiii3689

A guest on The Wall Street Journal Report spoke sometime last week about making over $631,000 in 4months with a capital of $100,000, which made me realize that as a beginner i have alot to learn, so please assist me with any pointers or tips that would help me make this much profit
Comment from : @michaelharris296

Fantastic Simple and easy to understand! Thank you
Comment from : @fungisaurs3717

Thank you Kirsty for a great primer on SAFEs
Comment from : @JohnOverstreet

Can some one please tell me at min 36:15 how did option pool increase happen?
Comment from : @shawntsou660

She said to trust her on the 10 increase in options, but how do you go about calculating that? Must we use it as a plug?
Comment from : @tmdesormeaux

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Comment from : @lelu4626

Thanks Kristy that was really informative
Comment from : @yasserghazy5297

MGMT1328885 I get this! Useful, simple and easy to understand Yay! 1018
Comment from : @irinayakubova346

I think that the lawyers should present this topic as it is heavily skewed towards rights and obligations and the finance stuff is minimal here - simple arithmetic to explain dilution I'd really want to understand why 8s the structure what are the alternatives and have someone with deep background and practice on fundraising contracts
Comment from : @calidata

This presentation was so good, really help me to understand safe and cap table, etc Awesome help!
Comment from : @anssiruuhikorpi5061

Great video! Just closed a SAFE after watching this
Comment from : @dopeinsights

Kirsty is the best
Comment from : @alvinjacobsblydenstein7948

Wonderful explanation
Comment from : @daviegaming07

Does the note automatically convert into a preferred share or an ordinary share ?
Comment from : @MLouah-gp9ef

1500 companies that's more than a lot nice presentation
Comment from : @badrekb5175

Thanks for the lecture! Great to see women represented in leadership at Y Combinator I wish I heard a female founder's voice asking a question, though
Comment from : @simmyhundal

Very well explained!
Comment from : @swateabeauty8835

Thanks for making life easier Kirsty Rocks !!!!!!
Comment from : @sanjeevanand6585

18:40 question about the dilution, same here!
Comment from : @genesisdotre

Cutest CFO I've ever seen
Comment from : @Gitohandro

That was great! Thanks!
Comment from : @XiaoLongGungFu

16:10 Ayee Ayeua Ayaye
Comment from : @rudeandconfused

I am lost on how she got the calculations for the shares, I'm getting different figures Anyone care to help me clear that up?
Comment from : @hoseaderrick