Understanding the differences between priced and unpriced rounds (SAFEs, ASAs, and CLNs)

If you're a UK startup founder thinking of raising funds for your business, you might struggle to figure out which funding plan to choose. Do you opt for a SAFE to spend lower legal fees and maintain control of your business? Or do you choose ASAs to qualify for SEIS/EIS? Or go for a priced round to attract more investors?

And this guide will help you understand your options, so you can choose what's best for you.

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The contents of this article is for informational purposes only and does not constitute legal or tax advice. Decisions related to tax should be made after thorough research, consultation and verification from a qualified financial and legal advisor.

What is the difference between a priced equity round vs unpriced round?

Two major types of funding are priced rounds and unpriced rounds. Priced rounds let investors buy shares at a fixed price, and unpriced rounds defer the valuation and price per share discussions until later.

Here's a detailed breakdown of both:

Priced equity round

A priced round refers to when a company receives funding in exchange for equity based on an agreed company valuation (pre-money valuation). The investor buys new shares in the company at the agreed price per share.

Priced rounds take longer to negotiate because the founder and investor need to agree on an accurate valuation of the company. They also involve longer negotiations (up to 6-12 months) and more legal expenses.

In December 2025, Runware raised £38m in a Series A priced round led by Dawn Capital to build a single API for media AI and its Sonic Inference Engine®².

Unpriced financing

Unpriced financing includes convertibles - funding in exchange for a promise to give the investor equity in the future. You can choose from a number of unpriced securities, like:

• SAFE (Simple Agreement for Future Equity): a contract that promises investors the right to receive your company's shares in a future priced funding round without specifying the company's valuation at the time of the investment.
• Convertible Notes: A loan that converts into shares during a future qualified financing round, usually with a discount rate, interest rate and valuation cap.
• ASAs (Advanced Subscription Agreements): A UK-specific agreement designed to comply with SEIS/EIS tax schemes that must convert within 6months (at a share price determined in the next qualifying priced funding round).

Unpriced financing might be best for your start-up if you're looking for less expense on lawyers, faster and simpler agreements, and funding without losing control of your company.

How do priced equity rounds work for startups?

In a priced round, an investor funds your company in exchange for equity or shares of the business. Each of these shares is worth a certain amount of money.

Priced rounds could include series A, B, C, or D. The process usually involves:

• Founders and investors negotiate to set the pre-money and post-money valuation of the company.
• Price per share calculation based on the pre-money valuation divided by the fully diluted shares.
• Investors buying the preferred stocks that have voting rights, anti-dilution protection, veto rights on major decisions, etc.
• Company ownership calculations using post-money valuation
• Diluting the founders' shares and increasing the option pool.
• Signing legal documents, including term sheets, etc

Before negotiating a priced round or setting a preferred investment amount, think through the pitch for the next round of investors and work backwards.

Where do you want your company to be by the next round? How much funds and time do you need to position your startup to be attractive to the next set of investors? Use this estimate as a benchmark for the minimum funds you need from investors.

Advantages and disadvantages of a priced round

Priced rounds have pros and cons, depending on your company's stage and unique needs.

Advantages of a priced round

Here are a few advantages of priced rounds:

• Clear valuation: Priced rounds reveal your company’s ownership upfront. You know exactly how much equity you are selling to investors, unlike SAFEs, which leave much uncertainty about how much ownership you'll retain at your next priced round.
• Settled cap tables: Founders issue shares immediately so they know what their cap tables look like. This lets founders know how much their shares are diluted from the onset.
• Attractive to VCs and generally attracts larger funding: Priced rounds pose less risk to investors because ownership and negotiation terms are clearly defined from the beginning. VCs and institutional investors that can provide larger funding usually prefer priced rounds

Disadvantages of a priced round

Priced rounds have some downsides for startups. Here are a few of them:

• Pre-mature company valuation: For startups in pre-seed and seed stages, you'll need to negotiate company valuation even before revenue stabilises or you've fully built the product. It's hard to accurately calculate the company's value. Inaccurate valuation might cause down rounds in the future and unfavourable terms for the founders and employees.
• Legal fees and administrative work: Priced rounds require more lawyers and admin. You'll have to do lots of negotiations on voting rights, liquidation, board seats, and paperwork like updating cap tables and writing stock purchase agreements. This shoots up the cost and can be too expensive for founders just starting out.
• Loss of control to investors: Priced rounds usually include issuing preferred stock with voting rights, pro rata rights, and liquidation terms.You'd also likely give investors board of directors seats. These changes mean they'll have some control over your future company decisions. While this offers new perspectives on opportunities and challenges, it could slow things down and disrupt projects you've planned for.
• Longer time spent: Priced rounds are more complex than convertible funding and typically take longer. This might not work well for bootstrapped startups looking to rapidly execute projects.

Types of convertible securities in unpriced financing

Company valuation for early-stage startups is hard to determine because there's usually too little data and significant uncertainty to draw on. This is why many startups prefer unpriced financing like ASAs, SAFEs, and convertible notes.

These funding options vary but are similar in that they let founders raise capital from investors without needing to define the company's exact value. They defer the valuation conversation to the future, allowing the founders to focus on growing the company. Here's a breakdown of the most common unpriced funding types.

SAFEs

SAFEs are agreements under which an investor provides funds in exchange for equity upon a triggering event, such as a priced round or an IPO.

Unlike convertible loans, the company doesn't need to repay the funds by a specific time or pay interest on them. SAFEs convert to equity at the agreed event or remain outstanding until the company is dissolved or liquidated.

SAFEs work well for pre-seed and seed stage startups. They also have a valuation cap, which specifies the maximum amount the investor's investment will be converted into equity. This is an incentive to protect early investors from losing significant ownership stakes in future equity rounds.

SAFEs are flexible and easy to complete. A downside is that founders have to convert SAFEs to equity, usually by the next funding round, whether they are ready for it or not. The other challenge is that founders easily lose sight of how much equity they've given up by agreeing on multiple SAFEs. This leads to more founder share dilution than they anticipated.

Convertible Notes

A convertible note is a short-term debt given to a company (usually a startup) that converts into equity upon a specified event or at a specified time. They work like normal loans, but are repaid with company shares before the maturity date. If you liquidate, you'll have to repay in cash with interest.

Convertible notes let companies delay the valuation conversation. Both parties can agree to proceed with the investment through faster, fewer negotiations and lower legal expenses.

Think of it like a loan but with company stock as the collateral. An investor provides the startup with funds to grow, with a promise to convert them into shares when you have sufficient data and experience to support a priced round.

Some convertible notes investors demand unfavourable terms or bankruptcy if you're unable to repay at maturity. To prevent this, include terms that require automatic conversion of the funds to common stocks at maturity.

Advanced subscription agreements (ASAs)

In Advanced Subscription Agreements (ASAs), investors provide funding to a company in exchange for future equity that must convert within a 6 month period. ASAs are designed to comply with the UK’s SEIS/EIS tax reliefs.

Seed Enterprise Investment Scheme targets early-stage companies offering investors 50% income tax relief, capital gains tax relief and loss relief³. While the Enterprise Investment Scheme is built for later-stage companies offering 30% income tax relief, capital gains tax relief and loss relief⁴. These tax reliefs make ASAs attractive to investors. The fund isn't debt and has no interest, but is expected to convert during a specific event, like an IPO or a qualifying round.

ASAs save time and speed up access to funds for startups, but their 6-month deadline can be too short if there are any delays in finishing the round.

When to opt for a priced round compared to leveraging convertible securities?

Stage of startup

It might be best to choose priced rounds if you run a later-stage company that has built some traction and has information to calculate your company valuation accurately.

It's worth considering unpriced rounds if you run an early-stage business and don't have the data or track record to negotiate an accurate valuation. Convertible funding, like ASAs and convertible notes secure funds and pushes the valuation to a future time.

Investor input

Priced rounds typically raise more funds than unpriced rounds. If you're looking for lower funds under £1,000,000 to £100,000, consider unpriced rounds. But priced rounds are more likely to attract larger funding and institutional investors.

Dilution risks

If you have run multiple safes or are looking to raise safe note funding that's higher than the last safe note funding, consider a price round. This will help you have a clear cap table, set out the ownership structure, and minimise the risk of surprise future founder dilution in your company.

Scalability

Scalable companies usually have the data to support priced rounds and need larger funding to capture their marketing. If your company has not proven scalability or is in an Industry that is generally not scalable, unpriced rounds might be a better option.

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Frequently asked questions

Here are some frequently asked questions about priced and unpriced rounds

What are the differences between priced rounds and unpriced rounds?

• In priced rounds (series A, B, C, and D), company founders offer investors equity upfront in exchange for cash based on an agreed valuation. On the other hand, investors in unpriced rounds (such as ASAs and SAFEs) provide funding to startups in exchange for future shares, under agreed terms.
• Priced rounds generally take longer to complete and require more negotiations, legal fees and admin work, while unpriced rounds are simpler, faster and inexpensive.
• Priced rounds reveal the ownership structure of the startup upfront, while cap tables aren't clearly defined in unpriced rounds.

How to choose between priced and unpriced rounds

To choose between priced and unpriced rounds, consider these factors:

• Your startups’ stage: unpriced rounds work well for early-stage companies, while priced rounds generally suit later-stage companies.
• How much funding you need: Priced rounds usually provide larger amounts of funding.
• Number of unpriced rounds previously run: After multiple unpriced rounds, choose a price round to reveal the extent of founder dilution and ownership structure.
• Investor expectations: VCs generally prefer priced rounds, while angel investors can agree on SAFEs, ASAs and convertible notes.

Sources used:

1. Research - state of UK investment q3 2025 - beauhurst.com
2. £38m to cut media AI costs and latency via edge inference hardware - startupmag.co.uk
3. HS393 Seed Enterprise Investment Scheme — Income Tax and Capital Gains Tax reliefs (2025) - GOV.UK
4. HS341 Enterprise Investment Scheme — Income Tax relief (2022) - GOV.UK

Sources last checked: 19/12/2025