Have two angels interested, raising $200K total on SAFEs. We're pre-revenue, have an MVP with 200 beta users, no paying customers yet. B2B fintech space. Solo technical founder (me).
What cap is reasonable? I've seen everything from $2M to $20M online and I have no idea where I fall.
pre-rev solo founder with beta product? honestly $2-4M cap range. maybe $5M if you have amazing traction signals or hot space. $20M would be laughed at in 2024 market.
I invest in pre-seed. $3-6M caps are normal for what you describe. The fact that you're in fintech (harder to monetize, more regulatory) might push it toward lower end. 200 beta users is good but not exceptional.
Rule of thumb: your cap should be 2-3x what you think your next priced round valuation will be. If you expect to raise a $2M seed at $8M valuation in 12 months, a $3-4M cap gives angels a good deal without being unfair to you.
That helps. What about the discount? Should I do cap only or cap + discount?
standard YC SAFE is cap only, no discount. Adding both is old school and makes the math complicated. Pick one. Most founders just use cap.
discount-only SAFEs are sometimes used when you can't agree on cap. like "20% discount to whatever the seed round prices at." but personally I'd never invest on discount-only - no upside protection
Quick sanity check: at a $4M cap and $200K raised, your angels own ~5% when they convert. That's reasonable for early risk capital. At $2M they'd get ~10% which is pretty generous to them. Think about how much dilution you're comfortable with.
$4M cap = 5% sounds right. Going to propose that to the angels. Thanks for the framework.
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