Understand how early-stage funding tools show up in your cap table.

Convertible & SAFE Notes
From founder-friendly terms to financial reporting, we break down the difference between SAFE notes and convertible notes, and what startups need to know from both a legal and accounting perspective.
Black dots on white background.
Founders shouldn’t have to decode legal language or accounting standards just to understand their own cap table. We break down the mechanics of SAFEs and convertible notes in plain English—so you know how these instruments impact ownership, future dilution, and your financial reporting. From day-one issuance to post-conversion cleanup, we’ve got your back.

We simplify what converts, when it converts, and how it affects your equity.

Convertible notes 101
Dollar coin with circular arrows around it, indicating financial transactions or flow.

A convertible note is short-term debt that converts to equity during a future funding round—usually with a discount or valuation cap.

Why they exist

Both are fast, founder-friendly ways to raise early capital without setting a valuation too early.

Black lightbulb icon with rays.
What’s a SAFE note?

SAFE stands for “Simple Agreement for Future Equity”—it’s not debt, doesn’t accrue interest, and converts when qualified financing occurs.

A pen writing on a document.
How we help
Headphones over a chat bubble with three dots.

We track the terms, maintain journal entries, and help founders understand the downstream implications for tax filing and investor reporting.

People at round tables in a cafe, some working on laptops and interacting.
Where structure matters as much as speed.

Built for seed-stage teams preparing for their first real round.

We work with California-based startups using SAFEs, convertible notes, and hybrid instruments to raise early funding. Whether you're closing a friends-and-family round or prepping for a priced equity raise, we’ll help you:

Record notes properly on your balance sheet

Check mark in a circle.

Understand conversion mechanics in your model

Checkmark inside a circle.

Coordinate with your legal team to ensure accuracy

A checkmark icon inside a circle.

Prep for GAAP, investor, or board-level reporting

A black checkmark inside a circle.

Frequently Asked Questions

What business owners are asking.

  • How do convertible notes convert to equity?

    Typically at the next priced round, with a discount and/or valuation cap. The number of shares is calculated based on the negotiated terms in the note.

  • Is a SAFE note considered debt?

    No. Unlike a convertible note, a SAFE note is not a loan and doesn’t carry interest or a maturity date. It’s considered a contract for future equity.

  • How are these notes recorded on the balance sheet?

    Convertible notes are usually recorded as liabilities. SAFEs are more nuanced—they may be shown as equity or other depending on structure and compliance requirements.

  • Do I need to issue 1099s or K-1s for these instruments?

    Generally, no—but the terms of your instruments and your entity structure may affect reporting requirements. We can advise you on what's needed.

  • Can these notes impact my tax return?

    Yes, especially upon conversion. Events like interest accrual, discounts, or valuation cap conversions can have tax implications. CPA review is essential.

Guy Hawkins

President of Sales

Person with short, dark hair, wearing a grey blazer over a black top, smiling at the camera against a light blue background.
Guy Hawkins

President of Sales

Man with gray hair and beard, wearing glasses, tweed jacket, and vest, smiling.
Guy Hawkins

President of Sales

Woman with curly brown hair in a light blue blazer, arms crossed, smiling.
Guy Hawkins

President of Sales

Man with glasses, gray beard, and dark blazer seated indoors.
Guy Hawkins

President of Sales

Woman in white shirt, holding a clipboard and pen, smiling in front of a glass door.
Guy Hawkins

President of Sales

Man smiles, working on a laptop, wearing a blue jacket over a yellow shirt.
Guy Hawkins

President of Sales

Woman with curly hair, in a striped shirt, looking directly at the camera in a classroom setting.
Guy Hawkins

President of Sales

Woman with braided hair, smiling, wearing a white long-sleeved top with cutouts, and black pants. Sitting near glass doors.
Guy Hawkins

President of Sales

Man smiles, working on a laptop, wearing a blue jacket over a yellow shirt.
Guy Hawkins

President of Sales

Woman with curly hair, in a striped shirt, looking directly at the camera in a classroom setting.
Guy Hawkins

President of Sales

Woman with braided hair, smiling, wearing a white long-sleeved top with cutouts, and black pants. Sitting near glass doors.
Guy Hawkins

President of Sales

Woman with braided hair, smiling, wearing a white long-sleeved top with cutouts, and black pants. Sitting near glass doors.
Guy Hawkins

President of Sales

Woman with braided hair, smiling, wearing a white long-sleeved top with cutouts, and black pants. Sitting near glass doors.
Guy Hawkins

President of Sales

Woman with braided hair, smiling, wearing a white long-sleeved top with cutouts, and black pants. Sitting near glass doors.