# Ways to raise: SAFEs, notes, priced rounds, debt and grants

> SAFEs, convertible notes, priced rounds, venture debt, revenue-based financing, grants and friends-and-family money: what each costs and when each fits.

Source: https://lopifi.com/learn/ways-to-raise-startup-capital
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What are the ways a startup can raise money — SAFE, convertible note, priced round, debt or grants?** SAFEs, convertible notes, priced rounds, venture debt, revenue-based financing, grants and friends-and-family money: what each costs and when each fits.

A startup can sell a piece of itself now ([a priced round](https://lopifi.com/md/glossary/priced-round)), sell a right to a piece later ([a SAFE](https://lopifi.com/md/glossary/safe), [a convertible note](https://lopifi.com/md/glossary/convertible-note)), borrow ([venture debt](https://lopifi.com/md/glossary/venture-debt), [revenue-based financing](https://lopifi.com/md/glossary/revenue-based-financing)), or be paid to do research ([SBIR](https://lopifi.com/md/glossary/small-business-innovation-research)). The choice decides who owns the company, who can make it repay, and what the books carry until the next round.

> **Dilutive money costs ownership; debt costs cash on a schedule; a SAFE defers the price but not the dilution.**

| Instrument | Dilutes? | Repaid? | Sets a price? | On the books until it converts |
| --- | --- | --- | --- | --- |
| Post-money SAFE | Yes, at the next round | No | No — a cap or discount | Usually a liability (ASC 480) |
| Convertible note | Yes, with interest | At maturity, if no round | No — a cap or discount | Debt, accruing interest |
| Priced round | Yes, now | No | Yes | Preferred stock and APIC |
| Venture debt | A little (warrants) | Yes, on schedule | No | Loan payable |
| Revenue-based financing | No | From revenue, to a multiple | No | A liability |
| SBIR award | No | No | No | Funded research, not capital |

The instruments side by side.

**SAFE**
- Pro: One standard document, no interest or maturity
- Con: Dilution arrives at the next round
- Best for: Pre-seed and seed, many investors closing at different times

**Convertible note**
- Pro: Familiar; creditor priority
- Con: Interest and a maturity date
- Best for: Bridges, and investors who want creditor standing

**Priced round**
- Pro: Sets a real price; converts the SAFEs
- Con: Cost, time and investor control rights
- Best for: A lead investor ready to set a price

**Venture debt**
- Pro: Little dilution
- Con: Must be repaid
- Best for: Extending runway after a round

**Revenue-based financing**
- Pro: No dilution; payments move with revenue
- Con: Expensive multiple if revenue grows fast
- Best for: Steady revenue, no wish to sell equity

**SBIR**
- Pro: No dilution, no repayment
- Con: Slow; topic-bound
- Best for: Research an agency wants done

When each fits

Founders ($60,000 for 8,000,000 shares) → SAFE ($250,000, November 2, 2026) → Series Seed ($2,000,000 at $8,000,000 pre) → Venture debt (Optional, after the round)

Northwind's path, as planned: each stage's money is a different instrument.

> **Every one of these is a securities sale or a contract.** Even the SAFE is a security, sold under an exemption with a Form D to file. The [securities law lesson](https://lopifi.com/md/learn/securities-law-for-startup-fundraising) covers the rules; [equity on the books](https://lopifi.com/md/learn/equity-accounting-journal-entries) covers the entries.

In this lesson: the SAFE (with its math and side letters), the convertible note, the priced round, venture debt, revenue-based financing, SBIR grants, and friends-and-family money.

## Pages in this lesson

- [The SAFE](https://lopifi.com/md/learn/ways-to-raise-startup-capital/safe) — 6 min. What is a SAFE and how does it work?
- [The convertible note](https://lopifi.com/md/learn/ways-to-raise-startup-capital/convertible-note) — 6 min. What is a convertible note, and how is it different from a SAFE?
- [The priced round](https://lopifi.com/md/learn/ways-to-raise-startup-capital/priced-round) — 5 min. What is a priced round, and what is a Series Seed?
- [Venture debt](https://lopifi.com/md/learn/ways-to-raise-startup-capital/venture-debt) — 4 min. What is venture debt and when should a startup use it?
- [Revenue-based financing](https://lopifi.com/md/learn/ways-to-raise-startup-capital/revenue-based-financing) — 3 min. What is revenue-based financing?
- [SBIR and non-dilutive grants](https://lopifi.com/md/learn/ways-to-raise-startup-capital/sbir-and-non-dilutive-grants) — 3 min. What are SBIR grants, and can a startup use them instead of raising?
- [Friends and family money](https://lopifi.com/md/learn/ways-to-raise-startup-capital/friends-and-family-round) — 3 min. Can I raise money from friends and family, and what are the rules?

## Where this lesson's rules come from

- [Y Combinator, SAFE financing documents](https://www.ycombinator.com/documents) — The post-money SAFE: cap only, discount only, or MFN (reference)
- [NVCA Model Legal Documents](https://nvca.org/model-legal-documents/) — The model certificate of incorporation, stock purchase, investors' rights, voting and ROFR/co-sale agreements (reference)
- [Wikipedia, “Venture capital financing”](https://en.wikipedia.org/wiki/Venture_capital_financing) — Venture rounds — background (reference)
- [ASC 480-10 — Distinguishing Liabilities from Equity](https://asc.fasb.org/480/tableOfContent) — Why a SAFE usually sits with the liabilities until it converts (codification)

## Read further

- https://lopifi.com/md/startups/how-to-account-for-safes
- https://lopifi.com/md/accounting/safe
- https://lopifi.com/md/accounting/convertible-note
- https://lopifi.com/md/accounting/priced-round

- **Track:** [Cap tables & raising](https://lopifi.com/md/learn/equity)
- **Lesson:** Lesson 3 of 10 — 8 min
- **Terms taught:** [SAFE](https://lopifi.com/md/glossary/safe), [Convertible note](https://lopifi.com/md/glossary/convertible-note), [Priced round](https://lopifi.com/md/glossary/priced-round), [Venture debt](https://lopifi.com/md/glossary/venture-debt), [Revenue-based financing](https://lopifi.com/md/glossary/revenue-based-financing), [Small Business Innovation Research](https://lopifi.com/md/glossary/small-business-innovation-research)
- **Previous:** [Fully diluted versus outstanding, Cap table · Lesson 2](https://lopifi.com/md/learn/cap-table-explained/fully-diluted-vs-outstanding-shares)
- **Next:** [The SAFE](https://lopifi.com/md/learn/ways-to-raise-startup-capital/safe)
- **The course:** https://lopifi.com/md/learn