Comparing Crowdfunding Instruments: Common Stock, Preferred Stock, Convertible Notes and SAFEs


This practice note describes the various types of securities which are used in equity crowdfunding. It will describe the pros and cons of each security and, where appropriate, explain the reasoning behind the creation of the security. This practice note assumes the company raising capital is a corporation; however, each of these instruments may be adapted for use by a limited liability company (though it can a bit more challenging with convertible instruments).