What is a Discount?

When convertible notes or SAFEs convert into equity, they do so at a certain price per share. To incentivize and reward early investors, convertible notes or SAFEs often come with a discount, meaning they convert into shares at a price per share that is lower than the price per share paid by new investors.

The Discount Price is the price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate (usually around 80%).