District of Columbia Term Sheet - Simple Agreement for Future Equity (SAFE)

• Category: Corporations - Startup - Venture Financing Process
• State: Multi-State
• Control #: US-ENTREP-008-1
• Format: Word; Rich Text

Description

This term sheet summarizes the principal terms of the proposed Simple Agreement for Future Equity ("SAFE") financing of a Company, by certain Investors. This term sheet is for discussion purposes, is not binding on an Investor, nor is an Investor obligated to consummate the financing until a definitive SAFE agreement has been agreed to and executed. The term sheet does not constitute an offer to sell or an offer to purchase securities. The District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is a legal document used as an investment instrument between startups and investors. This term sheet outlines the key terms and conditions for the future issuance of equity to the investor. It is worth noting that while SAFE agreements are commonly used in various jurisdictions, including the District of Columbia, the term sheet may include region-specific clauses or provisions. A District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) typically contains the following sections: 1. Parties: Identifies the startup (issuer) and the investor entering into the agreement. The legal names and addresses of both parties are provided. 2. Capitalization Table: Presents the current ownership structure of the startup, including existing shareholders, ownership percentages, and details of any preferred stock or convertible notes. 3. Valuation Cap: Specifies the maximum pre-money valuation that will be used to calculate the number of shares the investor will receive upon conversion of the SAFE to equity. 4. Conversion Trigger: States the event upon which the SAFE will convert into equity. Common triggers include the pricing round, sale of the company, or an initial public offering (IPO). 5. Discount Rate: Outlines the discount (percentage) applied to the valuation cap at the time of conversion, allowing the investor to benefit from a lower share price relative to future investors. 6. Pro rata Rights: Determines whether the investor will have the right to participate in future financing rounds to maintain their percentage ownership in the company. 7. Governing Law and Jurisdiction: Establishes that the agreement will be interpreted and enforced according to District of Columbia laws, and designates a specific jurisdiction for any legal disputes. While the District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is a standardized form, there may be variations that cater to specific financing needs or investor preferences. For example, investors may opt for a "Capped SAFE" that includes both a valuation cap and a discount rate, or a "Post-Money SAFE" that uses post-money valuation instead of a valuation cap. Overall, the District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is an essential legal document that provides a framework for negotiations and future equity issuance in startup funding rounds.

The District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is a legal document used as an investment instrument between startups and investors. This term sheet outlines the key terms and conditions for the future issuance of equity to the investor. It is worth noting that while SAFE agreements are commonly used in various jurisdictions, including the District of Columbia, the term sheet may include region-specific clauses or provisions. A District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) typically contains the following sections: 1. Parties: Identifies the startup (issuer) and the investor entering into the agreement. The legal names and addresses of both parties are provided. 2. Capitalization Table: Presents the current ownership structure of the startup, including existing shareholders, ownership percentages, and details of any preferred stock or convertible notes. 3. Valuation Cap: Specifies the maximum pre-money valuation that will be used to calculate the number of shares the investor will receive upon conversion of the SAFE to equity. 4. Conversion Trigger: States the event upon which the SAFE will convert into equity. Common triggers include the pricing round, sale of the company, or an initial public offering (IPO). 5. Discount Rate: Outlines the discount (percentage) applied to the valuation cap at the time of conversion, allowing the investor to benefit from a lower share price relative to future investors. 6. Pro rata Rights: Determines whether the investor will have the right to participate in future financing rounds to maintain their percentage ownership in the company. 7. Governing Law and Jurisdiction: Establishes that the agreement will be interpreted and enforced according to District of Columbia laws, and designates a specific jurisdiction for any legal disputes. While the District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is a standardized form, there may be variations that cater to specific financing needs or investor preferences. For example, investors may opt for a "Capped SAFE" that includes both a valuation cap and a discount rate, or a "Post-Money SAFE" that uses post-money valuation instead of a valuation cap. Overall, the District of Columbia Term Sheet — Simple Agreement for Future Equity (SAFE) is an essential legal document that provides a framework for negotiations and future equity issuance in startup funding rounds.