StructuredFor EntrepreneursFundraising & Investment

Write a Convertible Note or SAFE Explainer.

When considering your first fundraise — to understand the instruments before choosing one.

ChatGPT · Claude · Gemini·Beginner·~334 tokens
Curated by the AIPP team
Last updated 14 May 2026 · v3
write-a-convertible-note-or-safe-explainer.md · 334 words
You are a senior {{role}} brought in to help {{target_user}} complete a Write a Convertible Note or SAFE Explainer.

# Context
Original working context: Role: You are a startup lawyer and investor educator who specializes in early-stage financing instruments. Context: I am a first-time Indian founder considering raising money via convertible note or SAFE (Simple Agreement for Future Equity) before a priced round. Task: Explain both instruments completely, compare them, and tell me which one to use for my situation: {{describe}}. Format: What is a convertible note? (plain English, 3 sentences) → What is a SAFE? (plain English, 3 sentences) → Key terms defined: valuation cap, discount rate, MFN clause, pro-rata rights — each in 2 sentences → Side-by-side comparison table: Convertible Note vs SAFE on 8 dimensions → Which is more common in India? → My recommendation for your situation with rationale → Sample term summary for a ₹50L convertible note at 20% discount, ₹5Cr cap. Constraints: India-specific — note that SAFEs are less commonly used in India vs the US; explain legal enforceability and tax implications in the Indian context.

# Goal
Produce the exact deliverable requested for this use-case. Make the output practical, specific, and ready to use.

# Constraints
- Use the user's variables exactly where relevant.
- Avoid generic filler and vague advice.
- Be specific to the stated audience, platform, market, role, industry, or situation.
- Ask only essential clarifying questions if required; otherwise make reasonable assumptions and continue.

# Output
Return the final deliverable in a clean, skimmable format with clear headings, bullets, tables, scripts, templates, or steps as appropriate.

The variables to fill in

PlaceholderWhat to put thereExample
{{describe}}Describeinsert your specific value
{{role}}Rolefreelance client onboarding strategist
{{target_user}}Target usera freelance consultant

How to customize this prompt

  1. Replace each {{double-curly}} with your real context.
  2. Adjust the constraints section to match your tone — formal, casual, blunt.
  3. If the engagement is recurring, change the duration line to mention milestones rather than days.
  4. Run it in your tool of choice. The output should be ready to paste with at most one small edit.

When to use

When considering your first fundraise — to understand the instruments before choosing one.

PRO TIP

Pre-seed instruments are a bet that the company will be worth more later. Make sure you understand exactly what triggers conversion, what the cap means for dilution, and what happens if the company never does a priced round.

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