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Convertible Note vs SAFE Comparator

Same headline terms can produce different dilution. See exactly how a SAFE and a convertible note compare at conversion when both have the same cap and discount.

SAFE
5.88%
at conversion
Principal$500K
Interest$0
Convertible Note
6.39%
at conversion
Principal$500K
Interest accrued$46K
The takeawaySame headline terms — but the convertible note converts 0.50 percentage points more equity than the SAFE because of accrued interest. SAFEs are simpler, cheaper to paper, and more founder-friendly. They've largely replaced convertible notes for early-stage rounds. Conversion driven by: Cap.
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How to use it

  1. 1
    Match cap and discount

    Use the same cap and discount for both instruments to isolate the interest-rate effect.

  2. 2
    Realistic conversion timing

    12-24 months is typical between issuance and conversion. Set this realistically.

  3. 3
    Compare investor percentages

    The percentages are what investors actually own at conversion. The dollar gap shows the cost to founders.

What is the convertible note vs safe comparator?

SAFE (Simple Agreement for Future Equity) and Convertible Note are both instruments for early-stage fundraising that convert to equity at the next priced round. They look similar — same cap, same discount — but differ in two important ways:

  • SAFEs have no interest. The principal is what converts.
  • Convertible notes accrue interest (typically 4-8% APR). The accrued interest converts alongside the principal.

Why it matters for founders

For an investment of $500K with 18 months to conversion at 6% interest, a convertible note converts ~$45K more than the SAFE — meaning more equity for the investor and more dilution for founders.

SAFEs have largely replaced convertible notes for pre-seed/seed rounds because they're simpler, cheaper to paper, and more founder-friendly. Convertible notes still appear in:

  • Bridge rounds at later stage.
  • International rounds where SAFEs aren't standard.
  • Some industry-specific rounds (deep tech, biotech).
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FAQ

Why do convertible notes still exist?+
Older format with established legal precedent in some jurisdictions. Required in some debt-friendly markets. Generally being replaced by SAFEs.
What's a typical convertible note interest rate?+
4-8% APR. Higher rates signal a more debt-like instrument; lower rates approach SAFE economics.
Can I have both SAFEs and convertible notes outstanding?+
Yes. Each converts at the next priced round per its own terms. Just track them carefully — most cap table tools (Carta, Pulley) handle this.
What's a 'maturity date' on a convertible note?+
The deadline by which the note must convert or be repaid. Typically 18-24 months. SAFEs have no maturity — they just sit until a priced round or liquidity event.