SAFEs and Notes

Best practices on working with SAFEs and Notes.

Entering a SAFE or Convertible Round

• Define the Security Type as SAFE or Note when defining the round.

• Enter the amount invested under the Investment Amount field. Total capital raised by the company in the SAFE/Note is entered as the Round Size. Specify the Valuation Cap (see here for uncapped notes)

That's it. The round now reflects a SAFE or convertible note.

If the note has not converted yet.

How to determine ownership post-conversion after a priced round? Your conversion depends on the valuation of the priced round and whether other competing notes or SAFEs exist. We recommend using the Cap Table Calculator to determine the projected conversion after a priced round.

• Use the New Round option to add a new priced round in the future. Specify the terms of this new priced round (i.e. investment amount, round sizes and valuations)

• Use the provided Cap Table Calculator to configure a cap table simulation where you can configure existing SAFEs and Notes along with parameters of the future priced round. The results of the conversion will be shown in the Pro-Forma Cap Table. You can apply the results of this simulation by clicking on the + Ownership Update button next to your fund's ownership.

• This will create an Ownership Update event after the round selected. This ownership update represented the conversion of the SAFE/Note and the ownership in the company post-conversion.

If the note has already converted.

If the note has converted, we need to tell Tactyc what the fund's ownership is in the company post-conversion. There are two ways of doing this.

Method 1: Apply an Ownership Update

• Apply an ownership update after the priced round and enter the fund's ownership in the company post-conversion in the Ownership Update

Method 2: Edit Shares in the Priced Round

If you have the cap table details post-conversion, you can also define a conversion by directly entering the number of shares to the fund post-conversion in the priced round.

• Edit the priced round and enable Enter Share Data

• Enter the following:

  • Share Price: The price of the round

  • New Shares Purchased: New shares purchased by the fund in this round

  • Total Shares Owned: Total shares owned by the fund after this round

  • New Shares Issued: Total new shares issued by the company in this round to all investors

  • Fully Diluted Shares Outstanding: Total shares outstanding after this round

• Tactyc will now automatically calculate your correct ownership to reflect the SAFE / Note conversion

Uncapped SAFEs or Notes

Tactyc requires a valuation at each round, so the system can calculate the latest FMV based on the last valuation. If a SAFE or Note were uncapped we recommend one of these 2 approaches:

• Enter a valuation cap you expect to convert at. This is typically the valuation of the next round. You may want to enter a note for this round to say "This is an uncapped SAFE. We currently expect to convert at [$x]mm". This is for reporting purposes.

• Enter a valuation cap of prior round's valuation cap + new round size. This would hold the investment's FMV constant

Valuation Policy

Some funds (most) hold their portfolio companies at the latest valuation caps, while others wait for a priced round to assign a valuation to the company. By default Tactyc will move up or down the valuation of the company based on the last cap of the SAFE or Convertible Note.

To override this default behavior, you can simply add a Valuation Update after the SAFE round to hold the company's value at your desired valuation.

For example in the below, a Valuation Update is applied to hold the company's value at $35mm instead of being increased to the cap of the SAFE in the Series A round.