Investor rights
What is Most Favored Nation (MFN)?
A SAFE/note provision that lets early investors automatically inherit better terms if later investors get them.
MFN clauses in SAFEs and convertible notes let earlier investors automatically receive any better terms granted to later investors - lower caps, higher discounts, additional rights. If you raise a $5M cap SAFE today and a $3M cap SAFE next quarter, the MFN holder on the first SAFE upgrades to the $3M cap. This protects early investors from being implicitly disadvantaged but creates compounding founder dilution if you race-to-the-bottom on caps across multiple SAFE rounds.