SAFE vs convertible note — which should I use for pre-seed?

Raising $300K from angels. Some want SAFEs, one wants a convertible note. What's the actual difference and which is better for me as the founder?

Key differences:

SAFE: Not debt. No interest. No maturity date. Converts at next priced round. Standard YC docs, free to use. Simpler.

Convertible Note: Debt. Accrues interest (typically 4-8%). Has maturity date (18-24 months). If no priced round by maturity, investor can demand repayment or conversion.

Founder-friendly: SAFEs are generally better — no ticking clock, no interest dilution, simpler cap table until conversion.

Investor-friendly: Notes give more protection — maturity date creates urgency, interest compensates for risk.

I invest via both. My preference for notes isn't about being "investor-friendly" — it's about tax treatment. Convertible notes are clearer as debt for tax purposes. SAFEs have some tax ambiguity that sophisticated investors' accountants worry about.

If the investor insisting on a note is writing a big check, just do a note for them. You can do SAFEs for the rest. They don't have to all be the same instrument.

Watch out for: stacking too many SAFEs at different caps. If you do $100K at $5M cap, then $200K at $8M cap, then $300K at $10M cap... when you do a priced round, the dilution math gets complicated.

Use a cap table tool like Carta, Pulley, or AngelList Stack to model the conversion. Know what your dilution will be BEFORE you sign.