> They defer the issue of valuation and, more importantly, dilution

That's what the cap if for. If the founder is 19 years old, fine, read a book on it (I recommend this: https://www.amazon.com/Funded-Entrepreneurs-Guide-Raising-Fi... but basically any will do) but angel investors that don't know what caps are are dumb angels.

> They obfuscate the amount of dilution the founder(s) is taking.

Also what a cap is for. Unless we're talking about it from the founders perspective, in which case it's their decision to raise another round or not. If the dilution doesn't make sense don't raise the round. If you're desperate and were banking on hitting the cap maybe the company wasn't worth what you thought it was worth when you raised your Angel round.

> They can build up, like a house of cards, on top of each other

Here I 100% agree. Early family and friends money or angel investments or small seeds should be convertible, but subsequent rounds should be priced, or a down round is going to eviscerate the cap table.

> They put the founder in the difficult position of promising an amount of ownership to an angel/seed investor that they cannot actually deliver down the round when the notes convert.

What? How? Only if the founder is lying or doesn't put in a cap can I possibly see this happening.

> The company has been around for a few years and has financed itself along with way with all sorts of various notes at various caps (or no cap) and finally the whole fucking mess is resolved and nobody owns anywhere near as much as they had thought.

False dilemma. The choice isn't "use convertible and get a fucking mess" or "do priced rounds for equity and keep things clean". If you keep your capped convertible round simple and follow it with a priced round for normal equity anyone with two brain cells can figure out what the outcome will be given different scenarios. I've seen some really, really fucked up priced rounds because some dumb angel investor took a dump on the shareholder agreement and it took hundreds of thousands in legal fees and payoffs to fix by the time they were going for what they ended up calling their seed (they renamed their small seed their angel round).

> It can easily be done for less than $5k in a few days and we do that quite often.

That isn't the issue. The issue is that a bunch of regulatory issues come in once a company is selling stock that a two person startup doesn't want to waste time dealing with.

> The first convertible or SAFE note issued in a company should have a cap on the total amount of notes than can be issued. A number like $1mm or max $2mm sounds right to me.

What? Is this at the idea phase or something further along? Because I don't know anyone that has a $1M cap if there is any serious amount of work or team.

> Don’t do multiple rounds of notes with multiple caps. It always ends badly for everyone, including the founder.

I agree. Only do this if you're desperate or if you raised a tiny angel round (<5% after cap).

> [...] a “pro-forma” cap table at the closing of the note

I agree, though more as a CYA thing to keep relationships good than something I think would be necessary if the founder set up a sane round in the first place.

I'm personally not a fan of SAFEs because they can get hairy when you have lots of angel investors, but convertible is great.

As a partial aside, this whole "strong views weakly held" (see http://avc.com/2016/06/strong-views-weakly-held/ for more details) is kinda annoying to debate with because it frequently boils down to me having to colour in the nuance. It's like a less extreme version of arguing with Trump supporters.

My style is:

Strong views strongly held, until they're no longer strong views because they've been eroded away by building, credible counter-arguments. I generally stop talking about the view during this period or when I do talk about it I'll ask questions. I think of this as weak views weakly held. Then I re-investigate the view's premises and:

1. If finding my original assessment still broadly correct, I evaulate the counter evidence and modify the view to include a greater degree of depth, since I now understand a further degree of the complexities. The view then becomes a "nuance aware-strong view, strongly held".

2. If finding my original assessment false, build a new strong view (strongly held) from the premises of others.

Strong support carries information "this information should be trusted" and I don't like broadcasting that signal if my view is weakly held.