There are four versions of the new post-money safe as well as an optional page letter. Some issuers have offered a new type of collateral as part of some crowdfunding offerings – which they have called safe. The acronym stands for Simple Agreement for Future Equity. These securities carry risk and are very different from traditional common shares. As the Securities and Exchange Commission (SEC) states in a new Investor Bulletin, a SAFE offering, whatever its name, cannot be „simple“ or „safe.“ 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 subsidiary letter, explanations of other technical changes we have made to the new safe (e.g.B. Language for tax treatment) and proposals for best use. While the vault may not be suitable for all funding situations, the conditions must be balanced, taking into account both the interests of the startup and investors. As with the original vault, there are still trade-offs between simplicity and completeness, so not all marginal cases are addressed, but we think the vault covers the most relevant and common issues.
Both parties are encouraged to have their lawyers check the vault if they wish, but we believe it offers a starting point that can be used in most situations without change. We stick to this belief because we have seen hundreds of companies first-hand every year and helped them raise funds, as well as based on the thoughtful feedback we received from founders, investors, lawyers and accountants with whom we shared the first designs of the post-money vault. 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. An important aspect of a SAFE is that it does not generate or reflect any debt between the parties. In practice, a SAFE is an agreement that can be used between a company and an investor. The investor invests money in the company with a SAFE. In exchange for the money, the investor has the right to buy shares in a future share round (if one occurs) subject to certain parameters defined in the SAFE. Y Combinator, a well-known technology accelerator, created the SAFE rating (simple agreement for future equity) in 2013 and uses it to fund most of the Seed phase startups participating in its three-month development meetings. Since 2005, Y Combinator has funded more than 1,000 startups, including Dropbox, Reddit, WePay, Airbnb, and Instacart. A SAFE (Simple Future Equity Agreement) is an agreement between an investor and an entity that grants the investor rights for future capital to the company similar to a warrant, unless, without determining a specific price per share at the time of the initial investment.
The SAFE investor receives the futures shares in the event of an evaluated investment cycle or liquidity event. SafThe aim is to offer start-ups a simpler mechanism to seek start-up financing as convertible bonds. The new vault does not change two fundamental features that we believe remain important for startups: another innovation of the vault 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.