Wisconsin Simple Agreement for Future Equity

• Category: Corporations - Startup - Venture Financing Process
• State: Multi-State
• Control #: US-ENTREP-008-5
• 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. Wisconsin Simple Agreement for Future Equity (WI SAFE) is a legal document used by startups and early-stage companies in Wisconsin to raise capital while deferring the determination of valuation until a later date. As a financing tool, the WI SAFE provides investors with the opportunity to invest in a company in exchange for the right to obtain stock or other equity interests in the future, typically upon the occurrence of a trigger event, such as a future equity financing or a sale of the company. The WI SAFE is specifically designed to simplify the investment process and reduce transaction costs, making it an attractive option for both investors and startups. It is a relatively straightforward agreement that establishes the terms of the investment, including the amount invested and various rights and restrictions associated with the future equity. There are two main types of Wisconsin Simple Agreement for Future Equity: 1. WI SAFE (pre-Roman Valuation): This type of agreement determines the valuation of the company prior to the investment. The investor agrees to invest a certain amount of funds, and in return, receives a promise to issue equity in the company once a triggering event occurs. The investor's future equity stake is determined by the pre-agreed valuation of the company. 2. WI SAFE (Post-Money Valuation): In this variation of the agreement, the valuation of the company is determined after the investment has been made. The investor invests funds in exchange for a promise to issue equity upon the occurrence of a triggering event. The investor's future equity stake is calculated based on the post-investment valuation. This type of agreement provides flexibility in determining the investor's future stake, as it takes into account the potential dilution caused by future financing rounds. Both types of Wisconsin Simple Agreement for Future Equity share common key terms and provisions. These typically include the trigger events, conversion and equity rights of the investors, information and inspection rights, dispute resolution mechanisms, and certain representations and warranties made by the company. It is important for both parties involved in a Wisconsin Simple Agreement for Future Equity to seek legal counsel to ensure compliance with state regulations and to address specific clauses and terms based on their unique circumstances.

Wisconsin Simple Agreement for Future Equity (WI SAFE) is a legal document used by startups and early-stage companies in Wisconsin to raise capital while deferring the determination of valuation until a later date. As a financing tool, the WI SAFE provides investors with the opportunity to invest in a company in exchange for the right to obtain stock or other equity interests in the future, typically upon the occurrence of a trigger event, such as a future equity financing or a sale of the company. The WI SAFE is specifically designed to simplify the investment process and reduce transaction costs, making it an attractive option for both investors and startups. It is a relatively straightforward agreement that establishes the terms of the investment, including the amount invested and various rights and restrictions associated with the future equity. There are two main types of Wisconsin Simple Agreement for Future Equity: 1. WI SAFE (pre-Roman Valuation): This type of agreement determines the valuation of the company prior to the investment. The investor agrees to invest a certain amount of funds, and in return, receives a promise to issue equity in the company once a triggering event occurs. The investor's future equity stake is determined by the pre-agreed valuation of the company. 2. WI SAFE (Post-Money Valuation): In this variation of the agreement, the valuation of the company is determined after the investment has been made. The investor invests funds in exchange for a promise to issue equity upon the occurrence of a triggering event. The investor's future equity stake is calculated based on the post-investment valuation. This type of agreement provides flexibility in determining the investor's future stake, as it takes into account the potential dilution caused by future financing rounds. Both types of Wisconsin Simple Agreement for Future Equity share common key terms and provisions. These typically include the trigger events, conversion and equity rights of the investors, information and inspection rights, dispute resolution mechanisms, and certain representations and warranties made by the company. It is important for both parties involved in a Wisconsin Simple Agreement for Future Equity to seek legal counsel to ensure compliance with state regulations and to address specific clauses and terms based on their unique circumstances.