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Lowering SAFE cap for larger tickets?

What is your advice/reaction to a founder that wants to issue two levels of SAFE notes?

Level 1: Minimum Investment: $10,000
 Conversion Terms: Convertible to stock in the Series A round at a $20 million pre-money valuation cap.
 
Level 2: Minimum Investment: $50,000
 Conversion Terms: Convertible to stock in the Series A round at a $10 million pre-money valuation cap.
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Answered by

Community Member

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This is not a good approach and will cause 409a valuation issues for the founder. It's also incredibly difficult for them to explain this to future investors. Every investor in this round should come in on the same terms. Then, after they close, they can raise the cap for the next SAFE as they can justify this with more traction.

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