Fundraising · Startups

What is the difference between Convertible Notes and SAFE notes?

Pardeep Sumria Lovely Group

Last updated on March 13th, 2017

I had the opportunity to review today a very interesting blog post published by Fred Wilson (Union Square Ventures) where he makes some good points on the difference between these two debt instruments. You can see the blog post in detail here.

After reading his post I am a bit confused as he states that both methods are not really in the best interest of the founder. Do you agree with his perspective? What is the main differences that founders should take into consideration when looking at convertible notes and safe notes? Thanks so much!

Joan Heminway I am a business law professor and business lawyer

March 14th, 2017

SAFE instruments are not notes-; they're not debt instruments at all. The are contracts for future equity. More information can be obtained here. I do not know the post you are referencing, but founders can give up a lot of equity through either arrangement, and I presume that may be what the author is referring to that is not in the best interest of a founder. There is a SAFE Primer here. It may help answer your questions about differences. But other than the difference that the SAFE does not require repayment of the invested funds, the two financing instruments can be drafted with many of the same provisions.

Lance Cottrell Board Member, Advisor, Mentor, Angel Investor, Security Strategist, & Public Speaker

March 13th, 2017

His suggestion to calculate what the cap table would look like post investment if it immediately converted at a range of prices is a good one. It makes it very clear how this would play out for all involved.

Paws Worldwide Founder at Paws Worldwide

December 18th, 2020

Hello , The important information for you. See the attachment to the email.

Cheryl Clements

December 29th, 2020

If you are having trouble viewing this email, click here. https://links.mealthy.com/a/1185/preview/941/102659/f77be90be81ab7a1c2588cbc3671ea7bad104fce {"page":{"body":{"container":{"style":{"background-color":"#F5F7F9"}},"content":{"computedStyle":{"linkColor":"#0068A5","messageBackgroundColor":"#FFFFFF","messageWidth":"600px"},"style":{"color":"#000000","font-family":"Arial, Helvetica Neue, Helvetica, sans-serif"}},"type":"mailup-bee-page-properties","webFonts":[]},"description":"","rows":[{"columns":[{"grid-columns":12,"modules":[],"style":{"background-color":"transparent","border-bottom":"0px solid transparent","border-left":"0px solid transparent","border-right":"0px solid transparent","border-top":"0px solid transparent","padding-bottom":"5px","padding-left":"0px","padding-right":"0px","padding-top":"5px"},"uuid":"2525792a-eb23-4f9e-b850-19f70b9d3031"}],"container":{"style":{"background-color":"#F5F7F9","background-image":"none","background-position":"top left","background-repeat":"no-repeat"}},"content":{"computedStyle":{"hideContentOnDesktop":false,"hideContentOnMobile":false,"rowColStackOnMobile":true},"style":{"background-color":"transparent","background-image":"none","background-position":"top left","background-repeat":"no-repeat","color":"#000000","width":"600px"}},"locked":false,"type":"row-1-columns-12","uuid":"7ef97362-a4b1-4a98-bd31-c8cfe5c40e67"},{"columns":[{"grid-columns":12,"modules":[{"descriptor":{"computedStyle":{"hideContentOnMobile":false},"style":{"padding-bottom":"15px","padding-left":"15px","padding-right":"15px","padding-top":"5px"},"text":{"computedStyle":{"linkColor":"#0068A5"},"html":"

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Dear,

The purpose of this message is to update you on the current state of Mealthy Inc. and how that effects you, as a Mealthy customer.

In 2020 Mealthy Inc has not only grown revenues 31% during the COVID19 Pandemic, a time when supply chains are a mess, raw material availability is hit and miss, shipping costs have gone up and consumers have less cash to spend but Mealthy Inc has also become profitable. While the acquisition by MVP Holdings Inc. brought with it a team that has decades of operational experience it also brought with it a team that understands how to create efficiencies in operations, cut unnecessary costs and negotiate better agreements on both the buying and selling ends of the business. That knowledge and know how has helped cut costs by over 20% thus in turn helping Mealthy Inc go from losing $1.9M in 2019 to becoming profitable in 2020. That is a huge and rare turn around!

In 2020 Mealthy started a relationship with Costco and has been selling the Mealthy CrispLid on Costco.com. This relationship has been very successful to date and it is leading up to putting the product in every Costco store in the Spring of 2021. When that happens the volume will more than quadruple the current volume being sold on Costco.com. Look for more updates on this coming soon.

In 2021 Mealthy has many projects on the to do list. First of all we will be launching up to 6 new product lines dependent on how COVID19 continues to effect the supply chains. The new product lines will put Mealthy in other kitchen/cooking/food industry segments that allow us to capitalize on not only our successes with the Mealthy Multipot Pressure Cookers but the Mealthy CrispLid as well. These new product lines will give us the ability to sell products to consumers on a daily or weekly basis and not just every couple years when they need to replace a Mealthy appliance. The new product lines when officially announced will enter Mealthy into an $683B annual market. We believe the new product lines will be a game changer for Mealthy.

In 2021 MVP also has plans to take Mealthy Inc public. While we cant yet go into details the plan is to take Mealthy public by the end of 2021. MVP Holdings Inc has the ability to take Mealthy public without the usual exorbitant costs and red tape that most companies would have to go thru to go public. To make that a reality Mealthy is first launching a 2nd round of CrowdSAFE funding thru a new platform WeFunder.com/Mealthy.

What is CrowdSAFE funding you ask? It's a platform that gives passionate customers like you the ability to invest in companies and brands that they believe in that they would not normally have the opportunity to do otherwise. For as little as $100 investment a passionate customer like yourself can also become an owner in the company and help build it bigger and stronger and give it the ability to create and launch new and updated products for you and your family to enjoy for years.

Why are we doing this? Mealthy wants to use the capital to launch new product lines, launch new updated products, expand international operations, launch new marketing campaigns and expand the current team in place.

You're probably asking how does this effect me as a Mealthy customer? It doesn't, but because you enjoy the Mealthy products we wanted to give you the opportunity to be a bigger part of Mealthy and to help continue to enjoy Mealthy products for years to come.

Mealthy Inc did an initial Crowdfund campaign in 2019 and raised the max allowable amount of $1.07M in just 90 days. It takes capital to grow any good company especially in the first few years. So now Mealthy has launched Round 2 of Crowdfunding. Mealthy Inc lost $3.6M in its first 2 years of operations. That is not uncommon for startups. What is uncommon for most startups is that they reach profitability by the end of year 3 like Mealthy has. Even though Mealthy has reached profitability that doesn't mean it has all the cash it needs to continue to grow and expand operations. That's where the 2nd round of crowdfunding comes in. With the new capital injection Mealthy can order more inventory to supply to the expanding sales channels both in the US and internationally. Inventory was tight in 2020 as Mealthy didn't have the capital to go out and buy the needed inventory levels such as companies like Ninja and InstantPot can. Without the inventory in the US most retailers and even Amazon wont buy from us as a vendor until we have actual product sitting in our US warehouse. So with more inventory, more marketing, new product lines and expanded operations we envision another double digit growth year and even greater profitability.

Once this round of crowdfunding is completed we will then begin the process of taking Mealthy Inc public. Once Mealthy is publicly traded every crowdfunding investor will be converted into an actual shareholder and will have publicly traded shares of Mealthy to do with as they please.

While we are not investment advisors and cannot give out investment advice, think about the publicity that would come with a profitable crowdfunded company actually going public. Very few to none ever get profitable much less go public from a crowdfunded launch. But that's where we are headed and it's happening sooner than later.

It is my firm belief that what we are building at Mealthy is more than products, it's more than recipes, it's more than a brand or a company...we are building a community of like minded people who love good food, good friends and good times spent with family around the kitchen table.

So please join us in continuing to build the Mealthy community.

For more information on this email: investorrelations@mealthy.com

For more information on Rd 2 of CrowdFunding go to: WeFunder.com/Mealthy

Sincerely,

Casey Musick
Chief Executive Officer

Mealthy Inc.

3437 W Shaw Ave.

Suite 101

Fresno, CA 93711

www.mealthy.com

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