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Founder answers

Clear, India-specific answers to the questions founders actually search — and the lesson where you can build it for real.

SAFE vs CCPS in India: which should you raise on?

In India most priced rounds use CCPS (Compulsorily Convertible Preference Shares — equity priced today), while the earliest cheques often use an iSAFE (an India-adapted SAFE that converts later at a cap or discount). A US-style SAFE doesn’t map cleanly because FEMA and the Companies Act shape which instruments are allowed.

How big should your ESOP pool be before a seed round?

A seed-stage ESOP pool in India is commonly around 8–12% of the fully-diluted cap table. Investors usually ask you to create or top it up pre-money, which dilutes the founders rather than the incoming investor.

Founder vesting and cliffs, explained

The standard grant is 4-year vesting with a 1-year cliff: leave before month 12 and you vest nothing; at the cliff a full year vests at once; after that it vests monthly. Vesting protects the company from a cofounder who leaves early holding a large, unearned stake.

Is my term sheet standard? The terms to check first

The terms that most affect your outcome are the liquidation preference (a 1× non-participating preference is the clean, standard default) and anti-dilution. Pro-rata rights and a single board seat at seed are normal; a participating preference is the main thing to push back on.

What does a 1× non-participating liquidation preference mean?

It means the investor receives the greater of (a) their original investment back, or (b) what they’d get by converting to common and taking their ownership share — but not both. It is the clean, founder-fair, standard preference.

How much equity should you give a cofounder?

There’s no formula, but the split should survive one question: who is taking the real, full-time risk for the next four years? Equal splits are often right; whatever you choose, decide it on purpose, write it down, and pair it with vesting so the split tracks work actually done.

Valuation cap vs discount on a SAFE: what’s the difference?

A valuation cap sets the maximum company valuation at which a SAFE converts (a lower cap means more shares for the holder). A discount gives a fixed percentage off the next round’s price. When a SAFE has both, it converts at whichever produces the lower price — the better deal for the holder.

Down rounds and anti-dilution, explained

Anti-dilution protects earlier investors if you raise a later round at a lower price (a down round) by adjusting their conversion price. Broad-based weighted-average is the standard, founder-friendlier method; full-ratchet is aggressive and resets to the new, lower price.

Fully-diluted vs issued shares: which percentage matters?

Fully-diluted ownership counts all shares that could exist — issued shares plus the option pool, plus convertibles and warrants on an as-converted basis. It’s the percentage that matters in a financing, because investors price and dilute on the fully-diluted cap table.