The Ledger
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Nathoo: Lawyers frequently make errors on SAFE conversion cap tables
“The cap tables that we see, and we've now seen thousands of cap tables, it's surprising how many times the lawyers actually get the conversions wrong.”
Nathu: Startup co-founders should generally split equity more or less equally
“We generally say that equity should be split more or less equally between co-founders. That doesn't necessarily mean exactly equally, But we generally find that where there is an equity split that's very mismatched, you know, one founder has 90% and the other …”
Nathoo: Series A leads push pre-money SAFE conversion targeting 20% ownership
“Series A lead investors are getting more clever about this and realizing that if the safes convert in the pre-money, then the, Lead investors getting less dilution. And really all that's happening is if the safes do convert in the round, they'll just massage t…”
Nathu: YC accepts proportionally fewer solo founder applicants
“We don't accept that many proportionally to the numbers that apply because there's so much to do in a startup.”
Nathoo: A SAFE Valuation Cap Is Not the Startup's Current Valuation
“They think it's a current valuation of the company. That's really not what it is. All it is, is a way for you to be rewarded for coming in at the earlier stage, ah, when in theory you're investing at a riskier stage.”
Nathoo: Closing Option Pools in Priced Rounds Are Usually Around 10%
“And usually the closing option pool, which is negotiated as part of the term sheets negotiations, it usually is around 10% of the post round shares.”
Nathoo: Priced Round Term Sheets Usually Specify SAFEs Convert Pre-Money
“Next thing is that the safes convert into shares, and although the safes themselves don't, ah, state this, the term sheet will usually specify that the safes convert in the pre-money.”
Nathoo: SAFE Investors Cannot Know Final Equity Ownership at Signing
“At the time that you actually sign your safe, you don't really know how much ownership you're going to wind up with after the priced round, and the reason for that is that even though the safe says how the safe's going to convert, it doesn't specify how many s…”