Raise Millions by Hustle Fund VC Page 24 There are two kinds of SAFEs: a pre-money SAFE and a post-money SAFE. When Y Combinator created the SAFE in 2013, it started as a pre-money safe. This is important – remember this. These SAFEs were open-source documents that have become the standard for founders to use when raising money. Without a SAFE, founders had to pay lawyers to draft a new contract from scratch. This was expensive and complicated to manage. SAFEs made it easier and more cost effective for founders to raise their earliest rounds. But it had an unintended consequence. Founders wondered, “A priced equity round takes a lot of paperwork, negotiation, and legal fees, which can easily cost me $20k. Why don’t I raise my entire round via pre-money SAFEs? I can just download it from the YC website and keep my costs low.” So founders started raising $2-3M rounds via SAFEs. But once they were ready to raise a priced equity round, founders weren't sure how much of the company they’d actually sold. They’d sliced the pizza in all kinds of weird shapes and sizes and never kept track of who owned what because of the nature of pre-money SAFEs. By the time all those people with pizza tickets come back to claim their slices, the founders may realize they have the smallest slice out of everyone… which can kill their incentive to grow the value of the pizza. hustlefund.vc / @hustlefundvc