Founder-Friendly SAFEs? What David Sacks Would Negotiate—and How Capitaly.vc Structures Seed Deals

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david sacks safe is one of the most searched phrases when founders try to decode what “founder-friendly” financing really looks like at pre-seed and seed.
Founders ask me the same thing every week.
What terms would a sharp operator like David Sacks push for, and how should I structure my round so I don’t regret it at Series A?
In this guide, I break down a practical, no-nonsense view of founder-friendly terms and share how we structure seed deals at Capitaly.vc to keep speed, fairness, and runway in balance.

You’ll learn how post-money SAFEs actually impact dilution, how to set the valuation cap, when discounts make sense, what to do with pro rata and MFN, and where to draw hard lines on side letters and board control.
I’ll also give you a transparent “default SAFE” we use and a process checklist that closes rounds fast without blowing up your cap table.

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1) What Does “Founder-Friendly” Really Mean in a david sacks safe?

I define founder-friendly terms as those that preserve control, protect the cap table, and keep the next round clean.
Speed matters, but clarity matters more.
Based on public commentary from David Sacks and my own experience, “friendly” means simple documents, no hidden gotchas, and dilution that matches reality.

• Clear cap or clear discount. No mystery triggers.
• No board seats at seed. Guard control until Series A.
• Clean MFN or none. Avoid terms spaghetti.
• Light information rights. Monthly or quarterly summaries are enough.

Founder-friendly is about alignment.
Investors win when you raise the next round on better terms and build a durable company.

2) Post-Money SAFE vs Pre-Money SAFE: Why It Matters

Post-money SAFEs make dilution predictable because the investor’s ownership is calculated after all SAFEs in the round.
Pre-money SAFEs stack in ways that surprise founders later.
The YC post-money SAFE fixed that opacity.

• Post-money SAFE: You know exactly how much you sold at the moment you sign.
• Pre-money SAFE: Ownership can drift up as more notes come in.

I prefer post-money for clarity.
It lets you model and negotiate in the open, which is the essence of founder-friendly.

3) The Valuation Cap: How to Set It Without Backfiring

The cap is a proxy for price.
Set it too high and investors may pass or ask for heavy MFN.
Set it too low and you give away dilution you didn’t need to.

• Use comparable seed rounds in your sector and stage.
• Factor in progress: users, revenue, LTV/CAC, or technical milestones.
• Model what the next round likely prices at and leave some uplift for investors.

A practical rule I use is this.
If your likely Series A comp is 2–3x higher than your cap, you’re in a healthy zone.
Don’t chase vanity caps that slow the round and complicate conversion.

4) Discount-Only and Uncapped SAFEs: When, Why, and Red Flags

Discount-only SAFEs can be founder-friendly when you have momentum and a fast follow-on round ahead.
They are clean and simple.
Uncapped with MFN is risky for founders because the MFN can import later concessions you didn’t plan for.

• Use discount-only when you expect a priced round in 3–6 months.
• Avoid uncapped + MFN unless the round is tiny and strategic.
• Cap + discount is the default when timing is uncertain.

Clarity beats cleverness.
If you can’t explain the outcome in one sentence, don’t sign it.

5) MFN Clauses: Friend or Foe to Founders?

MFN gives early investors the right to adopt better terms you give to later investors in the same round.
It sounds fair, but it can cascade into messy amendments.

• Good MFN: Narrow scope, same instrument, same round, no side-letter import.
• Bad MFN: Broad scope that drags in board rights or governance concessions.

I keep MFN tight or skip it.
If you must include MFN, specify it applies only to economic terms within that SAFE, not governance rights.

6) Pro Rata Rights: How Much to Grant and to Whom

Pro rata lets investors maintain ownership in the next round.
It’s fair to give it to institutions and lead angels, but avoid granting pro rata to every $10k check.

• Grant pro rata to investors above a threshold, like $100k+ or $250k+.
• Cap total pro rata to avoid blocking the next round.
• Use a “Major Investor” definition aligned with your round size.

Make the pro rata math easy.
Pro rata should help your real champions double down, not jam your Series A allocation.

7) Information Rights and Reporting: Keep It Light but Real

Investors need updates to help you, but heavy reporting kills velocity.
I favor lightweight information rights at seed.

• Monthly or quarterly email with metrics and cash.
• Annual financial statements if available.
• No audit or board-level packages at seed.

Set the expectation early.
Short, consistent updates beat sporadic novels.

8) Advisory Shares and Side Letters: Avoid Hidden Landmines

Side letters can smuggle in board observers, vetoes, or rights that don’t show up in the SAFE itself.
I avoid governance promises at seed.

• Consolidate rights into the main SAFE when possible.
• Use simple advisor agreements, with cliffs and deliverables.
• Never promise a future board seat at seed.

Side letters should be rare, narrow, and economic-only.
Everything else belongs in the priced round.

9) Board Seats at Seed: David Sacks Would Say “Not Yet”

Board control is leverage you will need later.
Most top operators don’t push for a board seat at seed, and I don’t either.

• Use informal advisory calls and regular updates instead.
• Add a board observer only if truly strategic and time-bound.
• Shift governance to Series A where it belongs.

Keeping the board light lets you pivot faster and reduces legal drag.

10) Multiple SAFEs in a Round: Herding Cats Without Blowing Up the Cap Table

Seed rounds often include many checks and instruments.
Confusion compounds dilution.
Standardize as much as possible.

• Pick one SAFE template for the whole round.
• Use consistent caps or a narrow band.
• Track all instruments in a live model the minute you sign them.

For more on organizing a clean raise, see our blog post: How to Run a Fast Fundraise.
Clean inputs lead to clean conversion later.

11) Modeling Dilution: A Simple Framework Every Founder Can Use

I build a one-sheet model with four inputs.
Cash in, cap/discount, option pool size, and estimated Series A price.
Everything else flows from that.

• List each SAFE with cap, discount, and amount.
• Estimate post-money at Series A and conversion price.
• Simulate 10%, 15%, and 20% new option pool top-ups.

For more on dilution math, see our blog post: The Simple Math of Seed Dilution.
If the output surprises you, your investors will be surprised too.

12) Converting SAFEs at the Priced Round: Shadow Series and Pitfalls

At the next priced round, SAFEs usually convert into a shadow series with the same economics as the new preferred minus specific terms like participation rights.
Complexity shows up when caps and discounts collide.

• Decide conversion mechanics in your docs, not at the eleventh hour.
• Keep a single class of shadow preferred if you can.
• Avoid conflicting MFN rights that force bespoke shares.

Clean conversion is a downstream gift you give yourself today.

13) SAFE vs Convertible Note: Interest, Maturity, and Negotiation Leverage

Convertible notes add interest and maturity dates.
That can push urgency, but it can also add pressure at the wrong time.
SAFEs are simpler and usually faster to close.

• Use a note if an investor needs debt mechanics or timing pressure.
• Use a SAFE if speed and simplicity matter more.
• Don’t add maturity to a SAFE through side letters.

For a deeper dive, see our blog post: Convertible Notes vs SAFEs.
Pick the instrument that fits your timeline and leverage.

14) The YC Post-Money SAFE: What We Keep, What We Change

The YC post-money SAFE is a great baseline.
I keep the core economics because they are transparent and widely understood.
I modify around the edges to keep governance clean.

• Keep post-money math and plain language.
• Adjust MFN scope and information rights.
• Align option pool sizing to avoid the “option pool shuffle.”

For more on templates, see our blog post: YC SAFE vs Post-Money SAFE: A Founder’s Guide.
Templates are the floor, not the ceiling.

15) International Variants: ASA, KISS, and Local Traps to Avoid

Outside the US, investors may use ASA in the UK or KISS from 500 Startups.
Each has quirks around tax, consent, and conversion language.
I prefer aligning to US-style post-money mechanics when possible.

• Beware local tax triggers on discounts or interest.
• Standardize governance to avoid two-tier rights.
• Use counsel fluent in cross-border seed docs.

If local law forces a variant, mirror post-money logic for predictability.
Predictability is founder-friendly.

16) Founder Secondaries at Seed: Rare, But Here’s the Line

Seed secondaries are rare and should be small when they happen.
I approve them only when they extend founder runway and reduce stress without signaling misalignment.

• Keep it modest, often sub-$250k or a small percent of the round.
• Only when the company has traction and investor demand.
• Avoid at pre-product unless there’s a unique case.

Secondaries should increase focus, not introduce questions about commitment.

17) How Capitaly.vc Prices Seed Deals in 2025

I look at markets, momentum, and milestones.
We back teams early, but we price with the next round in mind.
Our default targets predictable dilution and a clean Series A.

• Cap ranges: Pre-seed $6–12M, Seed $12–25M, sector dependent.
• Discount: 15–20% when cap uncertainty is high.
• Pro rata: For meaningful checks above a clear threshold.

These are guide rails, not handcuffs.
We optimize for fit and speed over squeezing a last turn on price.

18) What David Sacks Would Likely Negotiate Today (Based on Public Commentary)

I can’t speak for David Sacks, and I’m not quoting private conversations.
Based on his public commentary and track record, I’d expect him to push for clarity, speed, and alignment.

• Post-money SAFE for predictable dilution.
• Reasonable cap tied to traction and next-round comps.
• Light governance and no board seat at seed.
• Pro rata for major investors and clean conversion mechanics.

That’s not just founder-friendly.
It’s investor-smart because it reduces friction at the next raise.

19) A Founder-Friendly SAFE Template We Actually Use at Capitaly.vc

Here’s our default “friendly but rigorous” SAFE setup at Capitaly.vc.
Use it as a reference, or ask us for the full template when you kick off a round.

• Instrument: YC-style post-money SAFE with valuation cap, optional discount.
• Cap: Within the ranges above, tuned to traction.
• Discount: 20% if the cap is at the upper end, otherwise 0–15%.
• MFN: Narrow, economic-only, same SAFE and same round.
• Pro rata: For checks meeting a “Major Investor” threshold.
• Info rights: Quarterly updates, basic financials annually.
• Governance: No board seat, no vetoes, no hidden side letters.

Simple, fast, and clean.
That’s the point.

20) Closing the Round Fast: Process, Data Room, and AI-Ready Docs

Speed wins when your process is crisp.
I treat the fundraise like a product launch with a defined start and end date.

• Create a one-pager, a 10–12 slide deck, and a short demo video.
• Set up a data room with metrics, pipeline, and unit economics.
• Use one SAFE template and pre-filled signature packets in your e-sign tool.
• Batch investor follow-ups twice a week.

For a playbook, see our blog post: Run Your Fundraise Like a Sales Sprint.
A tight process is the most founder-friendly term of all.

Real-World Example: Two SAFEs, One Clean Outcome

Let’s say you raise $1.2M across two post-money SAFEs.
SAFE A is $700k at a $15M cap.
SAFE B is $500k at a $20M cap with 20% discount.
At Series A pricing of $40M, what happens?

• SAFE A converts at $15M post-money logic.
• SAFE B converts at the better of $20M cap or 20% discount to the $40M price, which is $32M effective.
• You know the exact ownership sold at signing, and the rest is conversion math.

This is why I favor post-money.
No surprises at closing.

What to Never Give at Seed

I keep a short no-go list to protect founders from terms creep.
These are my hard lines unless there’s an extraordinary reason.

• No board seats or veto rights.
• No full-ratchet anti-dilution.
• No pay-to-play provisions in a SAFE.
• No hidden side letters granting governance.
• No uncapped MFN that imports governance terms.

These terms belong in later-stage, negotiated equity rounds if at all.
Not at seed.

Cap Table Hygiene: The Quiet Superpower

Great founders treat the cap table like code.
Every commit is reviewed, tracked, and rolled forward in the model.

• Update the cap table after every signed instrument.
• Mirror the cap table in your data room, not just a screenshot.
• Send a quarterly cap table snapshot to major investors.

For more, see our blog post: Cap Table Mistakes to Avoid Before Series A.
Hygiene compounds into trust and speed at every milestone.

Negotiation Tactics That Work With Sophisticated Angels

Experienced angels appreciate clarity and speed more than heroic haggling.
I lead with a fair, pre-baked term set and stick to it.

• Offer one clean term sheet and a short rationale.
• Time-box negotiations with a clear close date.
• Trade non-core terms if needed, not governance or price integrity.

Respect their time and they’ll respect your process.
It’s that simple.

Designing the Option Pool Without the “Shuffle”

The option pool is where many founders give up silent dilution.
Plan the pool size now with your Series A in mind.

• Size the pool based on a real hiring plan, not a random 10–20%.
• Avoid letting the pool increase come entirely pre-money at Series A.
• Negotiate a balanced pool refresh that matches your needs.

For more on talent planning, see our blog post: Building Your First 10 Hires.
Recruiting reality should drive pool size, not folklore.

Investor Updates That Create Leverage

Short, consistent updates keep your investor base engaged and ready to help.
They also create positive pressure when you open a round.

• Headline metric, pipeline highlights, and asks.
• Celebrate customer wins and ship velocity.
• Call out a crisp “use of funds” and milestones unlocked.

For more on this cadence, see our blog post: Write Investor Updates People Actually Read.
Updates are a fundraising force multiplier.

When to Switch From SAFE to Priced Round

SAFEs are a bridge, not a permanent capital stack.
Switch when you have the metrics to earn a price you’re proud of.

• Consistent growth, strong retention, and line-of-sight to milestones.
• Enough investor demand to anchor a lead and a board you trust.
• A clean cap table ready for conversion.

Don’t drag SAFEs across too many cycles.
Price when you can lead the narrative.

FAQs

1) What’s the easiest way to compare a cap and a discount?
Model both conversion prices against a realistic Series A valuation.
Pick the term that minimizes surprises and keeps investor alignment.

2) Should I give pro rata rights to every investor?
No.
Grant pro rata to major investors who add real value and meet a reasonable threshold, so your Series A allocation isn’t jammed.

3) Is an uncapped SAFE ever okay?
Sometimes, for tiny strategic checks with a near-term priced round.
If you use uncapped, keep MFN narrow and economic-only.

4) Do I need a board at seed?
Usually no.
Use advisory calls and updates instead, and formalize the board at Series A.

5) What’s a fair seed option pool size?
Base it on the next 12–18 months of hiring.
Often 8–12% is enough if you have a realistic plan.

6) Can I mix different SAFE caps in the same round?
Yes, but keep the spread tight and track conversion math live.
One template reduces friction later.

7) How fast should I aim to close a SAFE round?
Two to six weeks is typical.
Use a clear process, deadlines, and pre-filled docs to keep momentum.

8) What’s the biggest seed mistake founders make?
Stacking instruments without modeling dilution and conversion rules.
Surprises at Series A are expensive.

9) Are information rights at seed standard?
Yes, keep them light.
Quarterly updates and basic financials are enough for most investors.

10) How does Capitaly.vc work with co-investors?
We prefer collaborative rounds with one clean template.
We share models, align on rights, and move fast to close.

Conclusion

Founder-friendly isn’t code for investor-unfriendly.
It’s a commitment to clarity, speed, and terms that make the next round easier than the last.
Use post-money SAFEs for predictability, set caps with comps and momentum, keep MFN narrow, and reserve pro rata for real partners.
That’s the approach I believe operators like David Sacks favor based on public commentary, and it’s the way we structure seed deals at Capitaly.vc.
If you want a clean, transparent raise with no surprises, start with a simple david sacks safe mindset and finish with a cap table you’re proud to show your Series A lead.
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