Term sheet red-flag checklist
The terms worth stopping on, as a list to run before you sign anything.
Checklist
SAFEs and terms · Copyable template
Convertible note vs. SAFE decision worksheet
Work through which instrument fits your round, and write down why, before the conversation with counsel.
A SAFE postpones some of the pricing and governance work of a round, but it is not free capital: it creates a future claim that has to be modelled alongside every other security the company has issued. The same is true of a convertible note. Read either one as a legal document and a cap-table event at the same time.
This worksheet does not tell you which instrument to pick, and that is deliberate — the choice turns on facts about your company and your jurisdiction that a template cannot know. What it does is put the same six questions to each instrument actually on your table, so the comparison reaching your lawyer is already most of the way done.
Copyable template
What is in it
- What you are comparing
- The trigger
- Cap and discount
- What it does to the cap table
- Investor rights attached to each
- The differences you cannot settle yourself
- Alternatives to both
- The decision, and the reason
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Get the template
The template is ready. Add your email to open it, and you will also get The Raise Memo — a note for founders raising capital.
How to use it
Notes
Do not call a SAFE a loan, do not quote the valuation cap as though it were today's valuation, and do not rely on anyone's memory of what the standard form says. Before signing, collect the actual document, the cap table, every prior instrument, and the milestone you intend the money to reach, build at least three conversion scenarios, and ask qualified counsel to review the document and the model together rather than separately.
Where this comes from
The thinking behind it
Take it with you
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From the publication
Read The Raise Memo
A note for founders raising capital—what investors notice, how conviction gets built, and what to do next.
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