The fact of the matter is that Vijay Eswaran, when investing in some other companies may not think that SAFE or convertible notes are fully in the interest of the founders of a particular company.
Why is that?
Well, let’s find out why Vijay Eswaran may not be a fan of these types of notes or securities. The first reason is that they kick some important aspects off to the side. Importantly, they kick the aspect of valuation off into a distant juncture at much later point.
This matters because the founder may not know the actual ownership within the company. The lack of knowledge is certain to place a dent in the morale of the company. Valuation or dilution is something that is quite important for individuals to realize and understand each step of the way.
This knowledge will not only drive them but it will also give them an understanding of where they stand. The founder of a company may end up getting surprised and not realize that they were only going to receive a small amount of the company.
The lack of clarity is a big, very big deal. Notes can create a sense of illusion for the founders and not take them to where they want to be in the end destination. The more the notes one will pile on top of a company, the more issues that will be faced with in the end. Factors such as priced rounds and other aspects may cause large issues.
For this reason, prominent investors who are interested in the long-term success of founders will not opt to go for this model unless founders really want to go forward with this option. Make sure to do well and stay well and stay on the right path as a founder to reach your end goal.