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A comment on Bad Notes on Venture Capital.

Re:Bad Notes on Venture Capital by randylubin on Thursday September 18, 2014 @11:40AM (#8335802)
It's my impression that everything he says, if true, can also be applied to YC safe. Is that correct?

http://www.ycombinator.com/documents/

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Re:Bad Notes on Venture Capital by austenallred on Thursday September 18, 2014 @11:49AM (#8335858)
Yes. All of that applies to SAFEs as well, which are basically convertible notes that aren't "debt."

Basically convertible notes were kind of a financial hack that let you take money without setting a price by calling it "debt," even though no one really regarded it as debt. That brought along a couple small negative side effects, but the good outweighed the bad and let you close rounds quickly without $10-25k in legal fees and seemingly endless negotiation.

A SAFE is the same thing, but it jumps through the hoops necessary to not be called "debt" and gets rid of those side effects.

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