Understanding SAFEs and Priced Equity Rounds by Kirsty Nathoo

Рет қаралды 308,130

Күн бұрын

YC Partner Kirsty Nathoo gives the lowdown on several different ways to capitalize your company and how those impact founder equity and cap tables overall.
Transcript and lecture slides here: www.ycombinator.com/library/6...
This lecture is part of YC's Startup School, a free online program and global community of founders. Register and join the community at www.startupschool.org/
Chapters (Powered by bit.ly/chapterme-yc) -
00:00 Introduction
3:53 SAFEs
10:15 Post-money SAFEs
14:35 Dilution
22:40 Priced rounds
27:44 Priced round dilution math
41:07 Top tips
42:48 Don't over-optimize
44:08 Conclusion

Пікірлер: 159

@chapterme 7 ай бұрын

Chapters (Powered by ChapterMe) - 00:00 - Introduction 03:53 - SAFEs 10:15 - Post-money SAFEs 14:35 - Dilution 22:40 - Priced rounds 27:44 - Priced round dilution math 41:07 - Top tips 42:48 - Don't over-optimize 44:08 - Conclusion

@sadidrahimi 2 жыл бұрын

I really don’t understand how 1) this is free 2) only has 100k views People try to get rich quick following scams but won’t draw their eyes to real content like YC. YC is doing God’s work 💯

@ppxppx 5 жыл бұрын

the best explanation on the internet.

@sikhswim Жыл бұрын

Clearest and most coherent explanation of this I’ve ever seen. Thanks Kirsty!

@mmennote 5 жыл бұрын

Thank you for breaking it down in such a simplistic fashion.

@jamiejswagga 5 жыл бұрын

Great job Kirsty and thank you YC! Keep putting out more of this gold!

@monika615 3 жыл бұрын

Approachable summary for new founders to understand SAFEs, thank you

@JohnOverstreet 3 жыл бұрын

Thank you Kirsty for a great primer on SAFEs.

@Shakti_Singh_Om Жыл бұрын

It can't be explained better. thanks Kirsty and YC

@fungisaurs3717 3 жыл бұрын

Fantastic. Simple and easy to understand! Thank you.

@MegaXerk Жыл бұрын

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.

@visioneerdesign2081 4 жыл бұрын

Thanks for the presentation. Incredibly informative and helpful.

@diegooruna1305 3 жыл бұрын

One of the best videos so far on this topic

@estegy 2 жыл бұрын

Kristy is an amazing instructor ,,, great job

@jord9356 5 жыл бұрын

Thanks for articulating clearly, she knows her stuff!

@rudeandconfused 4 жыл бұрын

16:10 That's some nice articulating there.

@itsmohdiii3689 3 жыл бұрын

@@rudeandconfused LMAO

@daryaslizh9911 2 жыл бұрын

I really liked the explanation of SAFe, best I found so far

@johnbcollier 4 жыл бұрын

This video is gold. Thank you!

@Emmaxson 9 ай бұрын

This makes a lot of sense ❤ Thanks Kirsty

@anssiruuhikorpi5061 3 жыл бұрын

This presentation was so good, really help me to understand safe and cap table, etc. Awesome help!

@sanjeevanand6585 4 жыл бұрын

Thanks for making life easier. Kirsty Rocks !!!!!!

@charliekaru Жыл бұрын

Excellent work Kirsty.. Totally explained it super clearly

@rajinderyadav9250 4 жыл бұрын

Kirsty does a fantastic job of explaining how to understand the fund raising process, the fog has lifted. I feel more comfortable about approaching raising capital and need to start thinking about my cap tables.

@consommableechographiealge8418 3 ай бұрын

what is the cap in startup and what is the cap table ?

@ledgerfunding9000 3 жыл бұрын

GREAT explanations - super helpful!!!

@isaacm.1461 5 жыл бұрын

Just to echo others, thank you! Great info and great explanations.

@henrikcarmel374 4 жыл бұрын

A perfect presentation - in proper understandable english. She smiles with her eyes😃 The effects - and dilution potential - of the SAFE concept is finally fully understood.

@andreach5006 4 жыл бұрын

Thank you very much for this video! Really interesting

@DarshilPatelMusic 4 жыл бұрын

Information is a precious like gold.

@user-vs6kc6bk8w Ай бұрын

One of the best video regarding SAFE

@delbertwhitejr.1150 5 жыл бұрын

A great presentation on how to capitalize a venture, through the venture's life-cycle, and how to drive your capital financing process. YC continues to pay dividends.

@Bigeinla 10 ай бұрын

Best explanation on SAFEs. Thanks

@yasserghazy5297 3 жыл бұрын

Thanks Kristy.... that was really informative

@dopeinsights 3 жыл бұрын

Great video! Just closed a SAFE after watching this

@swateabeauty8835 4 жыл бұрын

Very well explained!

@consommableechographiealge8418 3 ай бұрын

thank you kirsty excellent 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😊 All my encouragements

@adrianwilk9368 7 ай бұрын

This is incredible! Thank you!

@AccelerList 5 жыл бұрын

Awesome video!

@harpreetgill8024 3 жыл бұрын

This was incredible. Can we have the excel sheet where this was calculated? Tried mimicking the calculations, got ~305 shares off, so although most of the #s tally, some are off in last few decimals. If the original is available, can reverse engineer to see where I went wrong?

@unankacynthia66 Жыл бұрын

Great explanation. Thank you

@afrococonut8018 7 ай бұрын

Extremely great explanation

@cahiker07 5 жыл бұрын

This was EXTREMELY valuable. Would take an entire 1-day, hands-on, scenario planning workshop on this subject. Let’s fire up Excel on the laptop and model these types of scenarios so we (investors and startups) can get smarter about how equity ownership plays out over time. Has anybody built an app to model these types of scenarios?

@thekingstonzone 5 жыл бұрын

Monique Lambert Yes, check out "Carta" scenario modeling. The company used to be called e shares...now called Carta.

@jmanoochb2 5 жыл бұрын

@@thekingstonzone Yes, that exactly.

@zhandosyembergenov1990 Жыл бұрын

Loved the content, thanks for sharing on KZfaq

@ozzyfromspace 4 жыл бұрын

What a beautiful explanation 👏🏽❤️✌🏽

@MASTERPPA Жыл бұрын

Very simple concept to understand.

@louisliu6488 Жыл бұрын

Thanks for sharing. Very helpful.

@daviegaming07 3 жыл бұрын

Wonderful explanation

@PJandBRO3343 5 жыл бұрын

Great info!

@XiaoLongGungFu 4 жыл бұрын

That was great! Thanks!

@sambyksg2011 Жыл бұрын

Excellent video!

@mohdmajid1 5 жыл бұрын

Thank you!

@genesisdotre 4 жыл бұрын

18:40 question about the dilution, same here!

@eduardouribe6426 2 жыл бұрын

Thanks for the information

@LECityLECLEC 3 жыл бұрын

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

@cooltechchoi9966 2 жыл бұрын

Great Job

@mdebrahimchowdhury8061 3 жыл бұрын

Good Job!

@sapphirequestions6080 2 жыл бұрын

thank you sooo much for sharing your knowledge, extremely helpful. PS : Kirsty you are officially my women crush

@xiaopinhaji8701 3 жыл бұрын

Thanks Kirsty

@streetcred9585 4 жыл бұрын

love it!

@TilekMamutov 5 жыл бұрын

@22:40 Why are series A investors negotiating such a large pool increase as a part of the investment in this example? Isn't it better for a company to increase the option pool only as needed?

@hemendrakumarvarshney8825 3 жыл бұрын

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.

@mathieumolas484 5 жыл бұрын

Thanks YC

@Emmaxson 9 ай бұрын

My take home - Do what you need to do with the money and make the company a success

@AlanDeRossett 9 ай бұрын

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.

@elijahvdp 2 жыл бұрын

Great presentation. One thing that you didn't explain and that i can't figure out is the option pool increase. How did you get to 1.695M?

@FahadShah822 5 жыл бұрын

This is the important stuff.

@azizmamatov6723 3 жыл бұрын

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.

@andyjbryant 3 жыл бұрын

"ok so this step you're going to have to trust me on" - re new options created... yeah she wasn't joking. The formula for new options created, after doing the algebra, is NO = -TOP.R(OC+NPs)-Vpre(-OAO + TOP.OC + TOP.NPs) / Vpre(TOP-1)+TOP.R where NO = new options TOP = target option pool OC = old common stock capitalisation NPs = New Preference shares created (for SAFE holders) Vpre = Pre money valuation OAO = Old available options

@GAMasterMedo 2 жыл бұрын

I'm trying to follow along. What is `R`? Can you put in the sample numbers in the calculation from this video into this equation to make it extra clear?

@andyjbryant 2 жыл бұрын

@@GAMasterMedo Sorry, R is total amount raised. I have a screenshot of a whiteboard with all my workings but when I posted a link here it was removed..

@elijahvdp 2 жыл бұрын

Still quite confusing tbh

@andyjbryant 2 жыл бұрын

@@elijahvdp yeah it is. It’s a bit easier to follow if you could see each step of my workings. TBH I just wanted to validate the ‘just trust me on this’ step from the video and build a model of my own.

@elijahvdp 2 жыл бұрын

@@andyjbryant I totally get it. I was just about ready to contact Kirsty to figure out the details until I saw your post. Thanks!

@MLouah-gp9ef 3 жыл бұрын

Does the note automatically convert into a preferred share or an ordinary share ?

@itsmohdiii3689 3 жыл бұрын

Well Done Kirsty

@shawntsou660 3 жыл бұрын

Can some one please tell me at min 36:15 how did option pool increase happen? ....

@badrekb5175 3 жыл бұрын

1500 companies .... that's more than a lot. nice presentation

@alvinjacobsblydenstein7948 3 жыл бұрын

Kirsty is the best

@huhdam8518 3 жыл бұрын

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.

@bccoleman8678 4 жыл бұрын

What if the options pool never got issued out to employees over time. And the directors decide to cut it back? Would it just get prorate get spread across the cap table?

@dedu15 2 жыл бұрын

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

@lucas182512 Жыл бұрын

thank you!!!!

@stephanielockett7541 3 жыл бұрын

thanks,

@Biz519Whiz_M.K.W. 2 жыл бұрын

Just learned what SAFE is while watching Shark Tank March 25, 2022. I definitely don't want to owe anyone be owned by someone else.

@mertdeveci6905 2 жыл бұрын

Did anyone find the model for the increase in the options pool she talked about?

@yunhuang1841 9 ай бұрын

welcome to my team!

@calebng9235 2 жыл бұрын

Can I ask for the calculation of the 1.695M shares increase in the option pool?

@MohamedOrikat 6 ай бұрын

In the scenario of priced round is less than the Cap, Safe investor should enjoy a discounted valuation.

@benatiayaniv 2 жыл бұрын

Super!

@mirzasaputra7153 4 жыл бұрын

When you'll upload the lecturer slide?

@Gabebox 3 жыл бұрын

Gotta be accepted to see those ;)

@SantiagoBasulto 2 жыл бұрын

Just screenshots, but useful to follow: docs.google.com/presentation/d/1iv_T1kU6ECgptgvEiz6qfuW8RG5s_J616vE3LIG5aGI/edit?usp=sharing

@afrococonut8018 7 ай бұрын

Does anyone know how she calcualted the new issues option poll of 10 % to be 1.695 M shares?

@Soul4Sail1 2 жыл бұрын

At 22:00 how would you calculate that equity then? You say once equity is given ie; stocks to employees,etc. then you're saying you calculate ie; %85 of the %92.5 remaining? & not from %100 & then how do you treat early investors vs. late in different funding rounds? the original percentage of post-money in that round is locked in & added? it seems in your examples..right?

@randyschwaggins Жыл бұрын

I'm gonna find a startup that has perfected human cloning. I'm buying it and making the entire business model around cloning this woman and then selling a Kirsty clone to every single startup in the world. It will become a benchmark necessity for companies to have in their team in order to secure investment. YC are already 10 steps ahead of me.

@hoseaderrick 4 жыл бұрын

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?

@steven871 5 ай бұрын

What date did YC begin encouraging Post-Money SAFEs? Seems it was some time in 2018? is a pre-money SAFE more beneficial to an investor than a post-money SAFE?

@VoltHaul Жыл бұрын

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?

@ozzyfromspace 4 жыл бұрын

Essentially, a SAFE holder can’t lose

@hexkwondo 3 жыл бұрын

Yes a Safe holder can lose. SAFE are more advantageous for the founder and the investor shoulders more risk. Plus they don’t accrue interest.

@victora9806 5 жыл бұрын

Hi. I think there is a mistake on shares quantity calculation on min (39:11). new group -> [Options available + Lead investor + Other investor] -> 10%+20%+5%=35% old group -> [Founders + Options Issued + SAFE inv A + SAFE inv B] -> 65% - total issued= 9,250,000+650,000+588,235+1,176,470=11,664,705 Hence new group calculation (post money cap): Options available: (10% / 65%)*11,664,705=1,794,570 (-12 shares in video) Lead investor: (20% / 65%)*11,664,705=3,589,140 (+235 shares in video) Other investors: (5% / 65%)*11,664,705=897,285 (+59 shares in video) Do I missed something?

@moj741 11 ай бұрын

I believe you are right

@ivonajavorovic7310 3 ай бұрын

what will be formula for 1% of the companys total share capital for anti dilution provision on weighted average provision, since this formula is not applicable C2 = C1 x (A + B) / (A + C) in my case

@adedejijubril8048 Жыл бұрын

How can I decipher the pre-money valuation?

@RainerArencibia Жыл бұрын

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?

@pzyeon-im8qp Жыл бұрын

I believe that's a no. Unless investors want to sell their shares and the agreement lets them. When company is profitable all shareholders get dividend after all expenses are deducted.

@jiangyou4475 2 жыл бұрын

its post money SAFE. why does the SAFE holder share get diluted after price round ?

@UserName________ 2 жыл бұрын

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