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Numerical Example: SAFE, discount, no cap


Investor has purchased a safe for $20,000. The Discount Rate is 80%.

The company has negotiated with investors to sell $400,000 worth of Series AA Preferred Stock at a $2,000,000 pre-money valuation. The company’s fully-diluted outstanding capital stock immediately prior to the financing is 10,500,000 shares.

The company will issue and sell 2,105,263 shares of Series AA Preferred at $0.19 per share to the new investors. The 20% discount applied to the per share price of the Series AA Preferred is $0.152. Accordingly, the company will issue 131,578 shares of Series AA-1 Preferred to the safe holder, at $0.152 per share.

Source: Y Combinator SAFE Primer

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