On Founded, subscribers on the "Growing Company" plan can generate two types of convertible investment agreements: Convertible Note Agreements and SAFEs. These investment agreements are often used by early-stage companies when they first raise capital from outside investors. These agreements are referred to as "Convertibles" because they allow the investor to convert their investment into shares at a later date when the company's valuation has been determined.

Convertible Notes

A Convertible Note Agreement is a loan agreement between an investor and a company. Unlike a traditional loan where the investor would receive payment of the principal plus interest, the investor is making the loan in order to be repaid in the company's shares once the company has raised funding from future investors.

You can read more about Convertible Notes here

SAFEs

SAFE stands for 'Simple Agreement for Future Equity'. Instead of negotiating a valuation and granting shares to investors, the SAFE allows investors to receive shares at a future date when the company's valuation is more certain.

You can read more about SAFEs here.

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