SAFE and convertible note review, before you sign.
Know what you are signing, before it converts. The instrument in front of you explained line by line: what converts, when, at what price, and what it does to the round after this one.
Caret reviews SAFEs, convertible loan notes and ASAs for founders: a line-by-line read, the conversion modelled across a range of round sizes, and a check on how the instrument interacts with anything you have already signed. Usually one to two working days, with a written summary and a call.
What a SAFE and convertible review covers
What it does at conversion, modelled
Not described in the abstract but worked through: the cap, the discount, and what your ownership actually looks like on the other side of the priced round.
The terms nobody negotiates
Attention goes to the valuation cap. Pro-rata rights, MFN clauses, liquidation preferences on converted stock and quietly agreed side letters tend to do more long-term damage.
The whole stack, not just this note
If there are earlier instruments, we check how they interact. Overlapping SAFEs on inconsistent terms are a leading cause of a slow priced round and an unpleasant cap table conversation.
A summary your co-founder will read
One page, no jargon, so the decision gets made by everyone who should be making it rather than by whoever happened to open the PDF.
How the SAFE review works
Send the instrument and anything earlier
The document in front of you, plus any SAFEs, notes or side letters already signed. The interaction between them is usually where the real answer lives.
We read it and model the conversion
Line by line, then run through what happens to your ownership at a range of round sizes.
A summary and a call
Written summary first so you can circulate it, then a call to talk through what is worth pushing back on.
SAFEs and convertible notes: common questions
What is a SAFE?
A SAFE — Simple Agreement for Future Equity — is an investment instrument that converts into shares at a later priced round rather than granting equity immediately. It is not debt: it carries no interest and no maturity date, so it cannot fall due for repayment. The commercial substance sits in the valuation cap, the discount, and how it interacts with any other instruments you have already issued.
Is a SAFE really worth reviewing? They are standard.
The template is standard. The valuation cap, the discount, the side letters and the interaction with instruments you have already signed are not, and that is precisely where the cost sits. A standard form with non-standard numbers is not a standard deal.
What is the most common problem you see?
Founders who signed several SAFEs at different caps without ever modelling the combined dilution, and discover at the priced round that they own materially less than they had assumed. It is nobody’s fault and entirely avoidable.
How quickly can you turn one around?
Usually one to two working days. If there is a signing deadline, say so in the first message and we will tell you immediately whether we can meet it.
Can you negotiate it as well as review it?
Yes. Often the most useful part is knowing which two terms are genuinely worth pushing on and which are not worth spending the relationship on — early-stage negotiation is as much about restraint as leverage.
What is the difference between a SAFE and a convertible note?
A convertible note is debt: it carries interest and a maturity date, and if it does not convert it becomes repayable. A SAFE is not debt and has neither, so it cannot fall due. That makes a SAFE simpler and usually friendlier to founders, but it does not make either one safe to sign unread.
Other things Caret does
We work with startups and SMEs on fixed-scope legal matters, with scope and fee agreed in writing before anything begins.
Due diligence simulator
We run legal DD on you exactly as a fund will at your round, and hand you the findings while there is still time to fix them.
Second opinion on AI drafts
Your model wrote it and it reads beautifully. Before it goes out, a lawyer checks which parts it got confidently wrong.
Privacy Policy & Terms
Drafted quickly against how your product actually behaves, then reviewed and signed off by a lawyer — not published straight out of a template.
Trademark registration
One EU application covers all 27 member states. We pre-check, choose the classes and file — and refund our fee if the check says you would be refused.