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A 30% discount in a SAFE note is significant for an investor as it rewards them for the risk they took when investing in a company at an early stage. This discount means that the investor can buy shares at a reduced price, in this case, 30% less than the actual price. For example, if a share costs $4, with a 30% discount, the investor can buy it for $2.8. This allows the investor to receive more shares for the same amount of money, increasing their potential return on investment.
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The Discount is a way to reward your uncle for the extra risk he accepted when no one else wanted to invest in you. The SAFE note might give him a 30% discount. Meaning that your uncle can buy each share for $4 * (1 - 0.3). That is, each share would cost him $2.8 dollars as opposed to $4. Allowing him to then receive 3,571 shares instead of 2,500.
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Ever wondered why some companies stay under the control of their founders, while others shift into the hands of their investors? Our Cap Table Templat...
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