SAFE vs priced round: which should you use for a seed round?
Based on advice from Geoff Ralston (Y Combinator), Paul Graham · Updated 2 October 2026
Short answer
Most seed rounds now use SAFEs, not priced equity, says YC's seed guide. A SAFE works like convertible debt without the interest rate, maturity date or repayment, and you usually only negotiate the amount, the cap and any discount. A priced round sets a valuation and share price, and is always more complicated, expensive and slow.
SAFE
- Works like convertible debt, without the interest rate, maturity date and repayment.
- Usually only three terms to negotiate: the amount, the valuation cap and the discount, if any.
- Converts into shares later, usually at your first priced round.
Priced round
- Sets a valuation and a price per share, and issues new shares to investors.
- Always more complicated, expensive and time consuming than a SAFE, which is why YC says to hire a lawyer.
- Brings terms like option pools, liquidation preferences and protective provisions into the negotiation.
Why SAFEs took over seed
Paul Graham's "High resolution fundraising" (2010) explains that convertible instruments let you raise from investors one at a time, at different prices, rewarding the ones who commit first, instead of waiting for everyone to agree on one round.
A dilution example from YC's guide
Raising $1 million at a $5 million pre-money valuation sells 16.7% of the company, not 20%, because the post-money valuation is $6 million.
In your deck
Know how you're raising, SAFE or priced round and the cap, before your first meeting. Your ask slide covers how much and what it buys.
Read the originals
- A guide to seed fundraising · Geoff Ralston (Y Combinator)
YC's guide to how much to raise, SAFEs, valuation and closing.
- SAFE documents and user guide · Y Combinator
YC's standard SAFE, the default for most seed rounds.
- High resolution fundraising · Paul Graham
Why SAFEs and notes let you raise one investor at a time.
- SAFE and convertible note calculator · Carta
See what you'll own after your SAFEs convert.
Questions founders ask
- Should I raise my seed round on a SAFE?
- Most seed rounds now do, according to Y Combinator's seed guide. SAFEs are simpler, cheaper and faster than priced rounds.
- What do you negotiate in a SAFE?
- Usually just the amount, the valuation cap and the discount, if any, per YC's seed guide.
- What is the difference between a SAFE and a convertible note?
- A SAFE works like a convertible note without the interest rate, maturity date or repayment requirement.
Get your deck reviewed the same way.
Comments on every slide, the words to change highlighted, and the 3 fixes that matter.
Keep reading
- How much should you raise in a seed round?
YC's guide: raise enough for 12 to 18 months, tie it to a plan, and try to give up 10 to 20%, never more than 25%. Plus Carta's data on founder ownership.
- How to make the ask slide in your pitch deck
YC's guidance for the ask: how much you're raising and what it gets you. Plus how much to raise and how much to give up, from YC's seed guide.