The idea is simple: if you have a SAFE with a 10% discount and the company is issuing Series A for $1/share, your SAFE won't convert into Series A but instead into Series A-1!And that Series A-1 will be identical in all respects to the Series A, and will be
lumped together with the Series A for all purposes, EXCEPT that instead of a liq pref of $1/share, the Series A-1 will have a liq pref of $0.90/share, to match the effective purchase price.And so on.
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And believe it ornot, I've had priced rounds with up to 15 series of preferred (Series A through Series A-14) to take into account all the effective purchase prices resulting from the various caps and discounts on the SAFEs (or combination of SAFEs and convertible notes).This concept is actually
baked right into the YC form of SAFE by the way.
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