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Glossary Discount

In the context of a SAFE or convertible note, a discount provision gives the investor a percentage discount on the price per share new investors in a priced round will pay for their shares. For example, if a SAFE investor has a 20% discount and new investors purchase shares at $5 per share, the SAFE investor would only only pay $4 per share because of the discount. This gives the SAFE investor greater purchasing power with the amount they invested in the SAFE, and is meant to compensate early stage investors for the higher risk involved in investing so early.