Fundraising · Lesson 1 · 16 min
SAFE vs CCPS, the India way
Why the instrument you raise on is a regulatory choice in India, not just a number — SAFE, iSAFE, CCPS and CCDs in plain English, with the FEMA/SEBI reality.
The instrument is a regulatory choice
In the US you raise your first cheque on a SAFE and move on. In India the instrument matters because a foreign or even domestic investor can’t simply hold a US-style SAFE: FEMA and the Companies Act shape what’s actually allowed. So Indian founders raise on aniSAFE, CCPS, or CCDs — each converts to equity, but the rules differ.
SAFE / iSAFE vs CCPS
A SAFE / iSAFE is a promise: money now, equity later, at your next priced round, on the better of a valuation cap or a discount. Nothing is priced today.
CCPS (Compulsorily Convertible Preference Shares) is priced equity today — preference shares that must convert to common later. It’s the instrument most Indian priced rounds actually use, and it carries the preference terms (liquidation preference, anti-dilution) you’ll meet in the term-sheet lesson.
Cap vs discount — the holder takes the better one
A convertible converts at the lower of: the valuation-cap price, the discounted round price, or the round price itself. Lower price means more shares for the same cheque — so the holder always converts on whichever helps them most. Build one below and watch which term wins.
Now model one
Set a cheque, a cap, and a discount, then a hypothetical round. See how many shares it becomes and which term the holder converts on. When it looks right, keep it — it’s added to your real cap table.
Model a SAFE conversion
The ₹2,500,000 converts to 50,000 shares (≈ 4.8% of a 1,050,000-share company) on the valuation cap.