Discount
A percentage reduction on the priced round share price, given to early money as compensation for earlier risk.
Why it matters
Straightforward on its own, but where a SAFE has both a cap and a discount the investor receives whichever produces the better outcome for them, not an average of the two.
A worked example
With a 20% discount, an investor converting alongside a $1.00 priced round pays $0.80 per share.
What is typical
10% to 25%, most commonly 20%.
Related terms
Valuation cap
The maximum valuation at which a SAFE or convertible note converts into equity.
Read more →SAFE
Simple Agreement for Future Equity. An investor gives you money now in exchange for shares later, when a priced round happens.
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VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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