Nautis Logo
Free Calculator

Convertible Note vs SAFE Comparator

Same headline terms can produce different dilution. See exactly how a SAFE and a convertible note compare at conversion when both have the same cap and discount.
SAFE
5.88%
at conversion
Principal$500K
Interest$0
Convertible Note
6.39%
at conversion
Principal$500K
Interest accrued$46K
The takeawaySame headline terms — but the convertible note converts 0.50 percentage points more equity than the SAFE because of accrued interest. SAFEs are simpler, cheaper to paper, and more founder-friendly. They've largely replaced convertible notes for early-stage rounds. Conversion driven by: Cap.

What is the convertible note vs safe comparator?

SAFE (Simple Agreement for Future Equity) and Convertible Note are both instruments for early-stage fundraising that convert to equity at the next priced round. They look similar — same cap, same discount — but differ in two important ways:

  • SAFEs have no interest. The principal is what converts.
  • Convertible notes accrue interest (typically 4-8% APR). The accrued interest converts alongside the principal.

Why this matters for founders & operators

For an investment of $500K with 18 months to conversion at 6% interest, a convertible note converts ~$45K more than the SAFE — meaning more equity for the investor and more dilution for founders.

SAFEs have largely replaced convertible notes for pre-seed/seed rounds because they're simpler, cheaper to paper, and more founder-friendly. Convertible notes still appear in:

  • Bridge rounds at later stage.
  • International rounds where SAFEs aren't standard.
  • Some industry-specific rounds (deep tech, biotech).

How to use this calculator

  1. 1
    Match cap and discount

    Use the same cap and discount for both instruments to isolate the interest-rate effect.

  2. 2
    Realistic conversion timing

    12-24 months is typical between issuance and conversion. Set this realistically.

  3. 3
    Compare investor percentages

    The percentages are what investors actually own at conversion. The dollar gap shows the cost to founders.

FAQ

Why do convertible notes still exist?+
Older format with established legal precedent in some jurisdictions. Required in some debt-friendly markets. Generally being replaced by SAFEs.
What's a typical convertible note interest rate?+
4-8% APR. Higher rates signal a more debt-like instrument; lower rates approach SAFE economics.
Can I have both SAFEs and convertible notes outstanding?+
Yes. Each converts at the next priced round per its own terms. Just track them carefully — most cap table tools (Carta, Pulley) handle this.
What's a 'maturity date' on a convertible note?+
The deadline by which the note must convert or be repaid. Typically 18-24 months. SAFEs have no maturity — they just sit until a priced round or liquidity event.