In the early stages of fundraising, many startups utilize convertible instruments like SAFE notes and convertible notes rather than issuing equity upfront. This approach allows founders to avoid premature company valuations when there’s often no revenue or clear financial modeling. While it might seem contrary, these instruments provide protection for both parties. Investors benefit from postponing valuation, mitigating risks of overpaying or setting unfavorable precedents, and allowing for better data-driven decisions in future funding rounds.
In the startup ecosystem, we talk a lot about raising money. But not enough about what's actually being sold.
At the seed or pre-seed stage, there's often no revenue, no unit economics, and no defensible financial model.
Collection
[
|
...
]