Startup Fundraising: SAFEs vs. Preferred Stock #1

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## Overview

SAFEs are the most common way to raise startup funds. But SAFEs have problems. We'll cover how Series First preferred stock can fix them.
Many startups use a Simple Agreement for Future Equity (SAFE) to raise funds. Founders love the speed, simplicity, and ubiquity of SAFEs.
But SAFEs have hidden problems that most founders and investors ignore, such as:

• Extra founder dilution
• Unclear cap table impact
• Complex and uncertain tax treatment for investors
• No man's land if the SAFE doesn't convert
• Lack of influence and control

Because of these and other problems many angel investors refuse to do deals using a SAFE. This is part of the reason why the Angel Capital Association (ACA) recently released a model convertible note template.
But founders didn't really have very many alternatives to SAFEs for early-stage fundraising. Founders often avoid convertible notes because of the added complexity and concerns about loan maturity dates. Selling preferred stock historically meant spending $100K or more to draft 200+ pages of legal contracts, which doesn't make sense for early stage startups raising smaller checks.
Recently several new options for preferred stock have emerged that may strike the right balance between simplicity and investor assurances.
In this brand new webinar, Sam Wong from Fundable Startups is joined by Brian Dirkmaat, partner at the law firm Rimon P.C. In this session, we'll cover:

• Early-stage investor goals
• Problems with SAFEs and traditional preferred stock fundraising
• How the new Series First funding vehicle may just be the right approach to balance simplicity and equity assurance.

We'll start with instructional slides, transition to a lively discussion of key topics, then end with audience Q&A.
Founder and investors should join this dynamic and very relevant discussion to learn the key factors needed to make the right choices when choosing and committing to startup fundraising!

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