Discount rate

A discount rate lets a SAFE or convertible note holder convert at a lower price than new investors in the priced round, expressed as a percentage off the round's price per share. A 20% discount means the holder pays 80 cents on every dollar the new money pays, share for share.

Discount alone vs. discount plus cap

A SAFE with only a discount (no cap) tracks the round's eventual valuation — good for the investor if the company does modestly well, but it offers no protection if the valuation rockets, since the discount is a fixed percentage of whatever price the round sets. A SAFE with both a cap and a discount gives the investor the better of the two outcomes at conversion, which is why almost every real-world SAFE today carries both terms.

How the math actually resolves

At conversion, Foundily computes the discount price as roundPricePerShare × (1 − discount) and compares the resulting share count against the cap-implied share count. Whichever is larger is what the investor receives. This means the discount only 'wins' when the round's own price per share — set independently of the SAFE — ends up producing more shares than the cap would have.

Typical ranges

Discounts on US seed SAFEs commonly run 10-20%; higher discounts (25%+) are less common and usually signal a note or bridge round priced under time pressure. There's no 'right' number — it's a negotiated trade-off between how much of a break the investor gets and how much extra dilution the founders absorb if the discount ends up binding.