SAFE or convertible note: which to use, and what it takes to actually close one
The short answer
Use a SAFE. For most US pre-seed and seed rounds it is the default, and Carta's data puts it at the large majority of pre-seed rounds. A SAFE is not a loan — no interest, no repayment date — which is why it is simpler and cheaper to close. Use a convertible note instead when an investor asks for one, when you are bridging to a priced round, or when you are raising outside the US.
Founders Form AI papers either one for $1,500 flat for the entire round, however many investors, with a licensed attorney's review.
What it actually takes, in order
- 1
Board consent authorizing the financing
- 2
The SAFEs or notes themselves, drafted to the terms you actually agreed
- 3
Side letters, read rather than filed unread
- 4
The promises inside the paperwork recorded from the day it is signed — an MFN gives that investor any better terms you offer later, and pro rata gives them the right to keep their percentage in the next round
- 5
Executed copies filed, and the cap table updated from them
Where the guides stop and the work starts
Every article on this question explains the difference and then leaves you to run the round. The part that causes trouble is not choosing between them. It is that four SAFEs signed at four different valuation caps, one of them carrying an MFN nobody wrote down, become a math problem at your Series A — at the point where it is too late to be tidy about it.
What you get
You get the SAFEs or notes drafted, the board consent behind them generated, and the side letters actually read rather than filed away unopened.
You stop being the one who remembers what you promised. Every MFN and pro rata right is tracked from the day it is signed.
And when a priced round arrives, the math runs off what you actually signed. Not off a spreadsheet somebody kept by hand.
What it costs
Traditional startup firm
$2,500–$15,000
Rises with investor count and with any drift from the standard forms.
Founders Form AI
$1,500
Flat for the round, attorney-reviewed, however many investors and side letters.
SAFE share figures attributed to Carta. Fee ranges from published startup legal fee guides accessed 2026-08-20.
Common questions
Is a SAFE better than a convertible note?
For most US pre-seed and seed rounds, yes. A SAFE has no interest, no maturity date and no repayment obligation, which is why Carta's data has it at the large majority of pre-seed rounds. A convertible note is better when an investor specifically requires debt protections, when you are bridging to a priced round with a defined conversion event, or when you are raising outside the US.
What does a SAFE round cost in legal fees?
A traditional startup firm charges $2,500 to $15,000 to paper a SAFE or convertible note round, rising with investor count and with any drift from standard forms. Founders Form AI charges $1,500 flat for the whole round with a licensed attorney's review, however many investors and side letters are involved.
What is an MFN clause and why does it matter later?
A most-favored-nation clause means that if you give a later investor better terms, this one automatically gets them too. It is harmless when you sign it and consequential eighteen months later, when a priced round has to convert every SAFE and note correctly. Founders Form AI tracks MFN and pro rata rights from the day they are signed, which is what the conversion models against.
What usually comes next
Model what your SAFEs actually convert into
Give us the cap, the discount and the round you expect and Founders Form AI models the conversion against the SAFEs and notes you have already signed — not against a spreadsheet someone maintained by hand. If you have an MFN sitting in a side letter, this is where you find out what it does.
- What each SAFE converts into at the round you are expecting, and what it does to your ownership
- Whether any of them carries an MFN, and which later terms that would pull in
- Where the option pool shuffle lands, before an investor proposes one
- Which pro rata and information rights you have already promised
Free, and it reads the paperwork you actually signed. Papering the round is $1,500 flat, attorney-reviewed, however many investors.