Qualified Financing
Definition
A qualified financing is the priced round, defined by a minimum size in a SAFE or note, that triggers automatic conversion of the instrument into equity.
How it comes up in fundraising
Notes and SAFEs specify thresholds (for example, a $1M+ equity round) so small raises do not accidentally force conversion.
Frequently asked questions
What happens if a round is below the threshold?
Instruments typically do not auto-convert; holders may convert voluntarily or wait, per the document’s terms.
Why does the definition matter?
It controls when your SAFEs crystallize into cap table ownership; founders should know their stack’s trigger before planning a small priced round.
Put this term to work
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