Fundraising advice online often sounds simple: “Just raise a SAFE,” “Angel investors love convertibles,” or “Do a priced round when you are ready.” But founders quickly discover that the real world is messier. Investors ask for different documents. Allocations get split between syndicates, individuals, and funds. International founders have to deal with cross-border compliance. And most importantly, founders want to raise without giving up control.

This guide breaks down the four structures that actually drive early-stage fundraising. By the end, you’ll know which tool fits your stage, your investors, and your long-term plans.

1. SAFEs

SAFEs are the default instrument for most early-stage raises, especially in the US.

They are simple, fast, and cheap. Investors give you capital today. They receive the right to convert into future shares once you complete a priced equity round. You avoid negotiating big legal terms, and there are no interest payments or maturity dates.

Best for:
• US-based angels
• Syndicates that prefer clean paperwork
• Fast-moving early rounds
• Founders who want lightweight compliance

Benefits:
• Founder friendly
• No interest or maturity
• Fast to close
• Accepted by most US investors

Downside:
• Stacking too many SAFEs can create significant dilution later
• Harder to negotiate special rights
• Not ideal for large checks that want more structure

2. Convertible Notes

Convertible notes work similarly to SAFEs but are technically debt. They convert into equity at your next priced round, but until then they accrue interest and include a legal maturity date.

Best for:
• Investors who want more protection
• Cross-border deals where investors prefer debt
• Founders raising from individuals who are used to notes
• Situations where rights or defaults matter

Benefits:
• Maturity date motivates future fundraising
• Allows additional negotiation (MFN, interest, etc.)
• More familiar internationally

Downside:
• Still debt; founders do not want a note coming due
• Slightly more expensive to paper
• Can complicate cap tables if not coordinated well

3. Priced Equity Rounds (Common or Preferred Shares)

A priced round is when investors buy shares directly at an agreed valuation. It is the cleanest and most transparent fundraising structure, but also the most legal-heavy.

Common share purchase agreements (CSPAs) are often used for smaller checks with lighter rights. Preferred stock financings include protective provisions, pro rata, governance, and full VC-style rights.

Best for:
• Investors who want real ownership today
• Large checks
• Experienced angels who want governance rights
• Companies with traction or revenue
• Rounds where valuation is clear

Benefits:
• Sets a firm valuation
• No future conversion surprises
• Clean cap table
• Strong investor alignment

Downside:
• Heavier legal lift
• More expensive
• Higher expectations from investors

4. Where SPVs Fit: A Vehicle, Not a Structure

One of the biggest misconceptions founders have is that an SPV is a “fourth fundraising instrument.” It is not. An SPV is simply a vehicle that aggregates investors into one line on your cap table. The SPV itself signs one of the instruments above:

• A SAFE
• A Convertible Note
• A Preferred Equity Agreement
• A Common Share Purchase Agreement (CSPA)

Think of the SPV as a basket. The basket can hold 20 angels. The basket itself uses the same legal instrument any individual investor would use.

Why founders use SPVs:
• Keeps the cap table clean
• Allows angels to participate without negotiating dozens of documents
• Enables cross-border investment
• Works for US and non-US founders
• Creates a bridge between global investors and your round

Why investors use SPVs:
• One check into the company
• Carry and economics handled inside the SPV
• Easier regulatory compliance
• Reduces managing dozens of individuals

Which Structure Should You Use?

Here is a simple checklist.

If speed matters

Use a SAFE.

If your investors want protection or you're working cross-border

Use a convertible note.

If you have strong traction and larger checks

Use a priced round.

If you want to bring multiple investors through one entity

Use an SPV (paired with any of the above).

If you are an international founder raising from US angels

Use a SAFE or note plus a US-based SPV. It eliminates KYC issues, keeps your cap table clean, and makes the process familiar for US investors.

The Most Common Setup I Recommend For Early Founders

For most early-stage founders, especially if you are raising internationally, the smoothest structure is:

1. Your primary raise uses a SAFE or a convertible note.
2. US angels are aggregated into a single SPV.
3. The SPV signs the same SAFE or note your other investors sign.

You remain in control. Your cap table stays clean. Investors feel protected. Compliance stays manageable.

Final Thoughts

Fundraising is not one-size-fits-all. The instrument you choose shapes your dilution, your investor relationships, and the expectations for your company. Pick the path that supports long-term control, minimizes legal friction, and keeps your story simple.

If you want help understanding which structure fits your raise, I’m always happy to share resources.