Convertible Notes, SAFEs and Warrants The Pros, the Cons, and the Pitfalls
Introduction Convertible notes, Simple Agreements for Future Equity (SAFEs) and warrants are widely used in startup capital raising in Australia, particularly across early and growth-stage funding. Each offers a way to raise capital or provide equity upside without immediately issuing shares, but each operates differently and involves distinct trade-offs. In this article our capital raising lawyers take a practical look at the pros, cons and common pitfalls of each instrument, to help founders and growth-focused businesses assess how they may affect dilution, timing and outcomes as their business grows. Key […]
Convertible Notes: A Term-by-Term Guide for Founders and Growing Businesses
A convertible note is a financing instrument used in startup capital raising where an investor lends money to a company and the amount converts into shares when a specified event occurs, typically a future equity funding round. Convertible notes allow companies to raise capital now while deferring valuation until a later funding round. Convertible notes are one of the most commonly used investment instruments in Australian startup and growth-stage capital raising. They offer a practical way for investors to fund a business now, while deferring the point at which shares […]
Startup Financing Explained: Convertible Notes, SAFEs and Warrants: Your Essential Guide
Capital raising can feel complex, especially when investors start talking about convertible notes, Simple Agreements for Future Equity (SAFE) and warrants. These instruments have become standard across Australian startup and growth financing, offering businesses flexible ways to raise capital without immediately committing to a priced equity round. As these tools become more common, understanding how they operate and when to use them is increasingly important. Our capital raising lawyers see these instruments regularly in practice, so we’ve drawn on those insights to help founders and growing businesses navigate them with […]