“SAFEs Are Deferred Dilution”: Anthony Rose’s Smarter Path to Fundraising

TL;DR

In this candid and tactical session, Anthony Rose, founder of SeedLegals, showed founders how SAFEs — though convenient — can quietly erode your equity and cost investors key tax benefits. His advice? Don’t just raise your next SAFE because it's easy. There’s a smarter, safer way.

🎤 Meet the Mentor: Anthony Rose

Anthony Rose is the founder and CEO of SeedLegals, the UK’s #1 startup legal platform, and an innovator who previously led the BBC iPlayer. At SeedLegals, he’s helped over 60,000 startups raise funding quickly, affordably, and more intelligently.

He’s on a mission to help founders avoid accidental dilution and help investors unlock tax benefits they didn’t even know they were missing.

🧠 Top Takeaways from the Session

1. SAFEs Come with Hidden Costs

“A SAFE looks founder-friendly — but you're giving investors a non-diluting instrument until it converts.”

Founders often stack SAFEs — first $500K, then $1M, then more — thinking it's the fastest path to capital. But the longer you delay converting those SAFEs into equity, the more dilution you suffer when the next priced round comes.

Anthony’s example:

“Say your next round is a $5M post-money SAFE, then a $10M round. When that SAFE converts, your dilution could go from 15% to 30% — twice as much. That's real money, real equity.”

2. Investors Lose Out Too — Often Without Knowing

Most investors don’t realize:

• ❌ They may not qualify for SEIS/EIS loss relief (UK) or QSBS exemption (US)

• ❌ They have no information or control rights

• ❌ There’s no defined timeline for conversion

“We speak to VCs every day who say, ‘Wait — you mean I don’t get loss relief on a SAFE?’”

Anthony emphasized that founders can give investors real shares up front — and protect their own equity — with smart structuring that doesn’t require a full-blown priced round.

3. Do a Priced Round Sooner (Even a Small One)

Instead of stacking another SAFE, Anthony suggests:

✅ Close a small priced round now ✅ Use it to convert prior SAFEs ✅ Avoid huge dilution ✅ Let investors claim the tax benefits they’re owed

“You don’t need a 100-page Series A round. You can do a small priced round in 2 days using platforms like SeedLegals.”

This approach keeps your cap table clean, aligns investor interests, and sets you up for a more successful Series A later.

4. Side Letters Can Fix What SAFEs Miss

If you must raise on a SAFE, don’t forget the side letter.

You can use it to give investors:

• 🔑 Info rights

• 🗳 Observer or board rights

• 💡 Tag-along or consent rights

• 📉 Terms for loss relief eligibility

“A SAFE with a side letter starts to look a lot like an equity round — without the cost or complexity.”

💬 What Founders Said

“I’ve raised on SAFEs before but had no idea I was giving up that much equity.”

“This changes how I approach my next round — I’ll convert earlier and stop stacking.”

“Anthony made something complex sound simple. Grateful for this clarity.”

🚀 Your Next Step

Don’t default to what’s fast. Choose what’s smart.

• 📅 Join our next Mentor Masterclass → angelclub.com/events

• 🎥 Access our curated public resources → angelclub.com/resources

• 🚪 Apply to join Angel Club → angelclub.com/membership

• ⚖️ Learn more about how SeedLegals can help you by scheduling a call → seedlegals.com