SAFE notes are the predominant structure used for angel investments. It is a is form of debt that converts a loan that turns into equity. SAFE notes are used in early stages of a company when valuations aren’t clear (or easy to determine.

In a conversation recently I was discussing some of the downsides of SAFE notes, and this post is a way to clarify some of that thinking. Some posts that I’ve found to be useful that I will probably refer back to the next time I’m talking about this topic:

• The Truth about Convertible Debt and Revisiting High Resolution Financing, both by Mark Suster
• Fred Wilson’s Thoughts on convertible debt, and Convertible and SAFE Notes
• Christopher Mirable’s article on Inc called Lesser of Two Evils