// Guide
Deal structures explained.
When a lead opens a syndicate they pick a structure — or leave it open for investors to suggest one. Here is what each of the choices actually means.
Priced equity
You buy shares at an agreed valuation today. Cleanest ownership picture, strongest rights, but the slowest and most expensive to paper. Standard from seed rounds upward.
Watch: The valuation itself, the option pool, liquidation preference and anti-dilution terms.
SAFE
Money now, shares later — converting at the next priced round, usually with a discount and/or a valuation cap. Fast and cheap, widely used at pre-seed and seed.
Watch: Whether the cap is realistic, whether it is post-money (dilutes founders less than you may expect), and how many SAFEs are already stacked up.
Convertible note
A loan that converts to equity at the next round, carrying interest and a maturity date. Similar economics to a SAFE, with creditor rights if things go wrong.
Watch: Maturity date and what happens if no round arrives before it — extensions are common and awkward.
Revenue share
You are repaid a fixed percentage of revenue until an agreed multiple is returned. Suits businesses with real revenue and no near-term exit intention.
Watch: The multiple, the revenue percentage, and whether cash flow can actually carry it.
Venture debt
A loan, usually alongside an equity round, often with warrants attached. Extends runway without fresh dilution.
Watch: Covenants, security over assets, and whether the business can service the repayments.
Secondary
You buy existing shares from a founder, employee or early investor rather than new shares from the company. No new money reaches the business.
Watch: Company consent, transfer restrictions, information rights, and why the seller is selling.
Not established yet
If the pitch does not settle the structure, leave the syndicate as not established yet. Investors can attach a suggested structure to their pledge, and the panel tallies the suggestions so the lead can see where the group lands before committing to terms.
Choosing as a lead
- Follow the pitch unless you have a reason not to — arguing structure before interest is confirmed slows everything down.
- Very early and small: SAFE or note. Larger, with a lead setting terms: priced equity.
- Set a minimum cheque that keeps the cap table manageable for the founder.
This guide is general information about common structures, not legal, tax or investment advice. Take your own advice before signing anything.