Safe Agreement Sample

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As flexible one-document security without many conditions to negotiate, startups and investors save money on attorney fees and reduce the time it takes to negotiate investment terms. Startups and investors usually have only one point to negotiate: the valuation cap. Since a vault does not have an expiry or maturity date, no time or money should be spent on renewing maturity dates, revising interest rates or other. Our updated safes are therefore post-money safes. By “post-money” we take the measure of the ownership of safe holders after (post) all the safe money has been charged – which is now its own turn – but always before (before) the new money in the price cycle that transforms and dilutes the safes (usually the A series, but sometimes Series Seed). Post-money-safe has what we consider to be a great advantage for founders and investors – the ability to immediately and accurately calculate the amount of ownership of the company sold. For founders, it`s essential to understand the dilution of each vault they sell, just as it`s fair for investors to know how many properties they`ve bought. Whether you are using the safe for the first time or already have safes, we advise you to read our Safe User Guide (a substitute for the original Safe Primer). The Safe User Guide explains how the vault is converted, with sample calculations as well as other details about the proportional secondary letter, explanations of other technical changes to the new vault (e.g.B.

Language for tax treatment) and suggestions for the best use. Paul Graham and yCombinator have recently established and publicly recommended the use of SAFEs over convertible bonds. For more information about SAFEs are available here: ycombinator.com/safe/. In 2013, startup accelerator Y Combinator (a Silicon Valley accelerator) set up an instrument known as a simple Future Equity Agreement (SAFE). It was created as a simpler alternative to traditional convertible bonds. It allows startups to simply structure their seed investments without a maturity date or interest rate. Another innovation of the safe concerns a “proportional” right. The initial vault required the company to allow safe holders to participate in the funding cycle after the funding cycle into which the vault was transformed (e.g.B. If the vault has been converted into Series A preferred financing, a safe holder – now holding a sub-series of Series A Preferred Shares – would be allowed to acquire a proportionate portion of the Series B Preferred Shares.