Ellen Ripley had never been afraid of taking risks. As the founder of Ripley Inc., she’d built a space logistics company that investors couldn’t stop talking about. Her vision was bold, her team was capable, and her technology was a game-changer.
So when it came time to raise her first major round of funding, Ellen thought she was ready. She’d raised early seed money using SAFEs, but now, staring at her cap table, she felt uneasy. Something didn’t add up.
Her attorney confirmed her fears. “Ellen, these SAFEs are going to cost you. If we don’t clean this up, you’re looking at losing more equity—and investors are going to ask a lot of questions.”
The Problem: A Cap Table in Chaos
In her rush to raise seed funding, Ellen had issued SAFEs with whatever terms investors preferred. Some had low valuation caps, others had high discounts, and a few had conversion terms that didn’t even make sense.
The patchwork of SAFEs created two big problems:
Dilution Risk: Ellen’s equity was at risk of being carved up by inconsistent terms.
Investor Confusion: Her cap table was a mess, and investors were already asking, “What happens when these SAFEs convert?”
Ellen realized she had no clear picture of how these SAFEs would impact her ownership—and no plan for how much she actually needed to raise.
Her attorney didn’t mince words: “If you try to raise money like this, you’ll lose control of the company—and you might not even close the deal.”
The Fix: A Strategy for SAFEs and Smart Fundraising
Ellen wasn’t about to let her hard work slip through her fingers. With her attorney’s help, she got to work cleaning up the SAFEs and creating a clear funding strategy.
1. Standardizing the SAFEs
First, Ellen and her attorney renegotiated with her early investors.
Uniform Valuation Cap: All SAFEs were updated to include the same, higher cap, ensuring her equity wouldn’t take a disproportionate hit.
Consistent Discounts: Any SAFEs with overly generous discounts were brought in line with market terms.
Clear Conversion Triggers: They cleaned up ambiguous language, making it easy to show how and when the SAFEs would convert.
This wasn’t an easy process—renegotiating SAFEs took time and finesse—but the result was a clean, understandable cap table that investors could trust.
2. Pro Forma Modeling
Next, Ellen and her attorney built pro forma models to map out exactly how the SAFEs would convert during the funding round.
The modeling revealed:
How much equity Ellen would retain post-conversion.
How much money she actually needed to raise to hit her growth milestones.
The potential impact of over-raising—and how to avoid it.
The results were surprising. Ellen realized she didn’t need to raise $2.5M like she’d planned. Instead, she could achieve her goals with $1.8M, preserving more equity for herself and her co-founders.
3. Preparing for Investor Meetings
Finally, Ellen’s attorney helped her craft a pitch that focused on clarity and confidence.
A clean, updated cap table showed investors exactly where they fit in.
Pro forma scenarios answered their questions before they could ask.
The Payoff: A Stronger, More Efficient Raise
When Ellen met with investors, the results were immediate.
The standardized SAFEs eliminated confusion and built trust.
The pro forma models showed Ellen was strategic and prepared.
By raising exactly what she needed, Ellen avoided unnecessary dilution and preserved control of Ripley Inc.
Investors offered $2.2M at better terms than Ellen expected. Her preparation not only secured the funding she needed but also allowed her to retain more equity for future growth.
“This is what I was hoping for,” Ellen said to her attorney after the deal closed. “We avoided a disaster—and now we’re in a stronger position than ever.”
Key Takeaways for Founders
Standardize SAFEs: Ensure consistent terms for valuation caps, discounts, and conversion triggers to minimize dilution and confusion.
Use Pro Forma Modeling: Understand how SAFEs will impact ownership and raise the right amount of funding to hit your milestones.
Don’t Over-Raise: Raising more than you need might seem like a safety net, but it often costs you more equity than necessary.
Clean Cap Tables Build Trust: A clear, organized cap table makes you more appealing to investors and prevents costly mistakes.
Get Your Cap Table and SAFEs in Shape
SAFEs can be powerful, but mismanagement can cost you equity and funding. Don’t wait until it’s too late. Schedule a consultation today to: ✅ Review and standardize your SAFEs for clarity and fairness. ✅ Gameplan your next raise with pro forma modeling to maximize efficiency. ✅ Organize your cap table to build trust and attract the right investors.
Let’s ensure your funding strategy protects your vision and positions your company for success.
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