Most Favored Nation & Information Rights on SAFEs
Written by Harry Prabandham
Curated by Rubric Financial
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Most Favored Nation (MFN) on SAFEs
- An MFN clause gives the SAFE holder the right to adopt the terms of any subsequent SAFE issued on better terms (lower cap, higher discount)
- If you issue a SAFE at $10M cap and later issue one at $8M cap, MFN holders can convert their SAFE to the $8M cap terms
- MFN is standard on early SAFEs (especially the YC post-money SAFE). It protects early investors from being disadvantaged by later fundraising
- MFN only applies to SAFEs, not to priced rounds. Once you close a priced round, all SAFEs convert and MFN becomes irrelevant
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About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
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