Let's say you're raising $300k from 25 angels. You'll probably do one of following:

1. Issue 25 SAFEs via Carta/your cap table management software
2. Issue 25 SAFEs via Mercury SAFE/other SAFE-raising platforms
3. Issue 25 SAFEs via a DIY DocuSign + email combo.

Us founders get caught up optimizing by comparing the pricing of Mercury (free) to Carta (first 20 investors free, then ~$100/investor/year) to DocuSign ($25/mo). I'm a multiple time founder and have raised using all 3 methods.

While all three options feel viable, I'm writing this blog post to show you the hidden cost of all three options that make them prohibitively expensive compared to using a founder-led vehicle.

The hidden admin cost

Issuing 25 SAFEs (i.e. more lines on your cap table) bloats admin cost exponentially more than having everyone on 1 SAFE.

It feels like issuing SAFEs are practically free: it's an open-licensed, widely-accepted, 2-page document blessed by the top startups, VCs, and accelerators. But they get really, really expensive as soon as you take those training wheels off and convert those shares during a priced equity round.

When you do a priced round, lawyers have to get involved. Lawyers are expensive. They will charge you for every bit of labor they do, for every investor: copy and pasting template documents. Formatting DocuSigns. Collecting signatures from each and every investor on your cap table. That means that every follow up email they send, every DocuSign link generate, is billed. Worse, you'll have to pay for labor per investor for every subsequent round you raise (Series A, B, and beyond).

This is exactly the trap that we founders fall into: we think the cost starts and ends at the round that we're currently raising for. And we discount the huge downstream cost.

Founder-led vehicles

Founder led vehicles are the most cost-efficient way of structuring a seed/pre-seed/friends and family fundraise.

Founder led vehicles are a legal-technology innovation that enable startups to save tens of thousands of dollars in legal fees and hundreds of hours of labor by consolidating small investor checks into one investment entity, taking up just one line on your cap table. So, instead of issuing 25 SAFEs to 25 investors, you'll have 25 investors take ownership in a proxy entity proportional to how much they invest, and that singular entity signs just one SAFE note to go on your cap table. This hugely reduces the number of investors that your legal team will need to coordinate with during your priced equity round.

It's really tempting to take the free SAFE-raising product and send it out to all your small angels. It's easy to do, and doesn't cost anything upfront. But downstream cost and headache is immense, and founder-lead vehicles solve that problem.

Using a Seed Labs founder-lead vehicle is really straightforward to use:

1. Send us some basic legal information about your startup and the round you're raising
2. We'll give you access to VentureOS, where you can manage your vehicle and create invite links for investors.
3. Investors invest and send funds to the founder-led vehicle while Seed Labs signs one underlying SAFE on behalf of the vehicle.
4. Funds get wired to you.

And there also some other cool benefits of using Seed Labs:

• Custom domain: send investors a link like invest.yourstartup.com
• Compliance offload: we've invested in heavy automation to handle the huge compliance overhead that you would've traditionally been paying a lawyer for.
• QSBS eligibility: Our legal structure takes advantage of QSBS, so most investors can be exempt from capital gains tax on their first $10M of returns on investment
• Retroactive-compatible: If you've already raised and have a bunch of SAFEs on your cap table, you can still take advantage of founder-led vehicles!
• Pricing: we're automating the private markets to enable a freer exchange of value in the innovation economy. Our technology-first approach allows us to reach radically lower costs, and we're passing those savings on to you to give you one of the most affordable and high-quality venture back-office services in the industry.

Other players offering founder-led vehicles will use FUD to panic founders into paying so they don't fall out of compliance. Seed Labs doesn't believe in that approach. We take on radical transparency. We built a simple pricing calculator here to show you the true cost of raising with too many people directly on your cap table, and how much you save by using us.

If interested, do reach out and you'll be live by the end of the day.