What should I look for in a SAFE agreement?

SAFE agreements are powerful investing tools. However, there are important terms in SAFE Agreements that you must understand. The five terms we'll consider in this article include discounts, valuation caps, pre-money or post-money, pro-rata rights, and the most favored nations provision.

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Simple Agreement for Future Equity

King Washington Simple Agreement for Future Equity

Name: King Washington Simple Agreement for Future Equity
Brand: US Legal Forms
Rating: 4.69 (378 reviews)

Category:

Corporations - Startup - Venture Financing Process

State:

Multi-State

County:

King

Control #:

US-ENTREP-008-4

Format:

Instant download

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.

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FAQ

A simple agreement for future equity (SAFE) is an agreement between an investor and a company that provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment.

Both SAFE and KISS notes are convertible securities, meaning they function much like convertible promissory notes, where investors provide cash today with the intent to convert to equity upon the occurrence of some future event.

KISS or Keep It Simple Security The 500 startups KISS convertible note, also known as Keep It Simple Security, is an agreement made between an investor and the company. The investor invests money in the company, and in exchange receives the right to purchase shares in a future equity round when it occurs.

An equity investment agreement occurs when investors agree to give money to a company in exchange for the possibility of a future return on their investment. Equity is one of the most attractive types of capital for entrepreneurs, thanks to wealthy investor partners and no repayment schedule.

SAFE agreements are neither debt nor equity. Instead, they're the contractual rights to future equity. These rights are in exchange for early capital contributions invested into the startup. SAFE agreements allow investors to convert investments into equity during a priced round at some future point.

A KISS agreement (which is a Keep It Simple Security), is a simplified investment structure that is similar to a convertible note, which gets capital into your company much faster than more conventional methods.

A SAFE is an investment contract between a startup and an investor that gives the investor the right to receive equity of the company on certain triggering events, such as a: Future equity financing (known as a Next Equity Financing or Qualified Financing), usually led by an institutional venture capital (VC) fund.

SAFE agreements are powerful investing tools. However, there are important terms in SAFE Agreements that you must understand. The five terms we'll consider in this article include discounts, valuation caps, pre-money or post-money, pro-rata rights, and the most favored nations provision.

SAFEs are not common stock. A SAFE is an agreement to provide you a future equity stake based on the amount you invested ifand only ifa triggering event occurs, such as an additional round of financing or the sale of the company.

A convertible note is debt, while a SAFE is a convertible security that is not debt. As a result, a convertible note includes an interest rate and maturity rate, while a SAFE does not. A SAFE is simpler and shorter than most convertible notes.

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The acronym stands for Simple Agreement for Future Equity. These securities come with risks, and are very different from traditional common stock.Expressions are neither permitted nor welcomed in a court of law. Fill out our Support Form at the bottom of this page if you have any questions. We have seen our nation weighed in the balance of history and found wanting. Track your overall performance in one place. No information is available for this page. However, nonaccredited investors may only invest in the Yieldstreet Prism Fund with a Yieldstreet IRA. New schools project Client Agency:NSW.

King Washington Simple Agreement for Future Equity

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