How to raise funds with a rolling SAFE
10 keys to helping your startup succeed in its rolling fundraising
Since we announced the rolling SAFE, many founders have reached out to ask for more info about how it works in practice. Today, based on our own experience of raising $6M+ with a rolling SAFE, we’d like to share concrete tips of how to do a rolling fundraising right.
Spoiler: None of it has to do with any legal technicalities.
It’s all about how you fundraise.
The old equity paradigm demands that founders focus 100% on fundraising to have any chance of being successful at it: that means pulling focus away from your product & business to instead spend all your time creating a compelling pitch deck, trying to get in contact with every investor alive, and pitching them one by one until you successfully fundraise (or until you acknowledge failure and get back to work, which only happens after months of wasted time and comes with low morale, a stalled business, and much less cash in the bank).
This is not how you fundraise with a rolling SAFE — and thankfully so!
The rolling SAFE has been created to let you tap into community capital by transforming your supporters into investors.
Here are the key aspects to fundraising with a rolling SAFE:
- Sell your vision, not a financial instrument. Some founders get excited — like us! — about the benefits of the rolling SAFE and then feel the need to market it to investors. Don’t get us wrong, we love the rolling SAFE and we’ve invested lots of legal, tax and technical resources to make it as robust and efficient as possible. But the details of the rolling SAFE are interesting to lawyers (at best). Investors are investing in your vision and your product — not the financial instrument you use to raise funds. So invite them to join in the adventure!
2. Put the pressure on investors, not on yourself. With a rolling SAFE you don’t have to “close your round”: anyone can invest at any time. On the investor side, your rolling SAFE rewards early investors since the valuation of your company increases as you raise more money. The rolling SAFE itself makes people see that if they want to secure the best valuation, they need to act quickly. You’re not in a hurry… but you should make sure your investors are!
3. Make people aware that they can invest. One of the main reasons why people don’t invest in your company is because… they don’t know they can! And that’s normal — startup investing used to require being an insider, knowing the founders and being in the right conversations during the restricted windows when the company was raising.
The rolling SAFE breaks those barriers, so make sure your offering is visible in your website — even better, make it visible within your app (check out the Fairmint widget for a turnkey solution if you haven’t already). If users love your app, invite them to become investors and participate in your success. The opportunity to invest in products that they love is new to most people, tell them about it!
4. Transform all your comms into a fundraising opportunity. Now that you have a live, continuous offering, you can fundraise 24/7, 365. Talking to a customer? A user? A community member? Sending a newsletter? Before the rolling SAFE you were selling one product; now you’re always selling two: your solution AND your equity. Use your rolling SAFE to seamlessly transform your business momentum into fundraising momentum.
5. Don’t talk about crypto. Yes, your rolling SAFE is a web3-powered tokenized SAFE with its own $TICKER that is fully DeFi-compatible, which gives it all kinds of superpowers. You’re excited about that? Us, too! Your investors? Not so much.
Keep in mind that for lots of investors DeFi, tokens, and crypto in general are still the unknown, more likely to give them anxiety than excitement. Make sure you adapt your communications to your audience! You’re telling an old-fashioned family office about your company’s fundraising? It’d be foolish to risk mentioning crypto. You’re telling your software engineer cousin who works at Google about your DeFi-compatible offering? Go for it :)
6. Don’t ask for money: let your vision, your product, your business do the talking. People don’t invest because you need money. They invest because they think your company is great, because your vision is inspiring, your product is super cool, your team is impressive…
So don’t create a fundraising-focused campaign; instead, regularly communicate to your community about your product, your business, your team. Concentrate on the things that matter to people and will convince them to invest and possibly re-invest. We’ve seen patterns where investors start with small checks and increase their investments as the company progresses. Don’t trick people into investing with shallow gamification techniques: give them the time and data to develop their own feeling of grabbing a seat on an awesome rocket ship.
7. Start with an attractive valuation. The reflex of founders in the old, pre-rolling SAFE world is to raise at the highest valuation they can get. It makes sense — but what is the magic number? $1M? $10M? $100M?
Your rolling SAFE solves the math problem for you: start with an attractive valuation and let the market value your company. Each time an investor invests, your rolling SAFE will automatically increase your company’s valuation. If you start with an overly aggressive valuation, you risk not fundraising at all. Better to start with an attractive valuation that rewards early investors and then let the rolling SAFE work its magic. When fundraising starts to slow down, you’ll know you’ve reached your current fair valuation.
8. Don’t let your valuation soar too high too fast. Your rolling SAFE is gaining traction, money is flowing in and the valuation of your company starts increasing rapidly. It’s tempting to let it run… But you don’t want your valuation to get disconnected from reality.
So make sure that you’re optimizing your fundraising as the valuation increases. If you’ve read this blog post, you’ll start your fundraising with an attractive valuation. Once it reaches a valuation that you deem positive and fair, it’s time to allocate more equity to it (which is as simple as clicking a button). This will help keep the valuation of your company in check while you continue to raise funds. And remember, you’re in control; you can pause your offering at any time.
9. Engage with your investors and reward your most active ones. You’ve successfully turned many of your supporters into investors? Great! Find ways for them to participate, they’re your most fervent fans and they’ve got lots of skin in the game to see you succeed. If they can, they will help you! And since you’re running a rolling fundraising, the more they spread the word about how much they love your product, the more potential investors you’ll reach. And if some investors are going above and beyond to help, you can reward them with more equity from your rolling SAFE.
10. Use your rolling SAFE as a gauge of your product-market fit. A famous anon on Twitter once said, “if you can’t turn your users into investors, you don’t have product market fit”. You’ve launched a rolling SAFE at an attractive valuation, communicated about it and yet only have a handful of investors out of the hundreds who said they love what you’re doing? Welcome to the real world. Talk is cheap, while actual investing takes conviction. If the investments aren’t there, it means your community isn’t very convinced yet.
But that doesn’t mean to give up! Instead, use your rolling SAFE as an indicator of product-market fit and keep iterating. Reach out to your community, ask for feedback, and leverage those learnings to build the solution they need. And FYI, it took Fairmint several months to secure our first few thousand dollars of investments before our fundraising started gaining serious traction.
There they are, 10 keys to a successful rolling fundraising.
If you just take away one thing, remember that the rolling SAFE allows you to raise funds without spending time actively reaching out to investors, focusing fully on delivering greatness to your community and communicating intelligently about it.
That’s the rolling SAFE superpower 💪 🚀
