Kings New York Simple Agreement for Future Equity

• Category: Corporations - Startup - Venture Financing Process
• State: Multi-State
• County: Kings
• 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. Kings New York Simple Agreement for Future Equity (SAFE) is a legal contract widely used in startup financing that allows investors to provide funding to early-stage companies in exchange for potential equity ownership in the future. This financing instrument provides a mutually beneficial agreement between founders and investors, offering simplicity and flexibility. The Kings New York SAFE is designed to eliminate the complexity of traditional investment structures such as convertible notes. It offers key advantages like transparency, ease of use, and a clear valuation framework. This innovative instrument aligns the interests of both parties while minimizing legal complications and negotiation efforts. The Kings New York SAFE comprises different types based on the specific terms and conditions outlined in the agreement. Some notable variations include: 1. pre-Roman SAFE: This type of agreement determines the valuation of the company prior to the investment. It specifies the ownership percentage the investor will receive upon conversion of their investment into equity in the future. 2. Post-Money SAFE: In contrast to the pre-money SAFE, the post-money SAFE includes the total valuation of the company including the new investment. This type clearly outlines the ownership percentage the investor will hold after the investment is made. 3. Discount SAFE: This SAFE type offers investors a discount on the future valuation at the time of conversion into equity. For example, a discount of 20% means the investor will convert their investment into equity at a valuation 20% lower than the valuation of the subsequent financing round. 4. Valuation Cap SAFE: With a valuation cap, this SAFE provides investors with an upper threshold on the valuation while converting their investment into equity. This ensures that the investor's ownership percentage is not diluted excessively, protecting their potential return on investment. 5. Most Favored Nation SAFE: This variation aims to protect the investor by offering them the best terms in the subsequent financing rounds. If the company later offers better terms to subsequent investors, the initial investor automatically receives the updated terms, safeguarding their investment against potential disadvantages. It is important for both founders and investors to thoroughly understand the specific terms and implications of each type of Kings New York SAFE. Consulting with legal and financial experts is advised to ensure compliance and to tailor the agreement to the unique needs and circumstances of the company and its investors.

Kings New York Simple Agreement for Future Equity (SAFE) is a legal contract widely used in startup financing that allows investors to provide funding to early-stage companies in exchange for potential equity ownership in the future. This financing instrument provides a mutually beneficial agreement between founders and investors, offering simplicity and flexibility. The Kings New York SAFE is designed to eliminate the complexity of traditional investment structures such as convertible notes. It offers key advantages like transparency, ease of use, and a clear valuation framework. This innovative instrument aligns the interests of both parties while minimizing legal complications and negotiation efforts. The Kings New York SAFE comprises different types based on the specific terms and conditions outlined in the agreement. Some notable variations include: 1. pre-Roman SAFE: This type of agreement determines the valuation of the company prior to the investment. It specifies the ownership percentage the investor will receive upon conversion of their investment into equity in the future. 2. Post-Money SAFE: In contrast to the pre-money SAFE, the post-money SAFE includes the total valuation of the company including the new investment. This type clearly outlines the ownership percentage the investor will hold after the investment is made. 3. Discount SAFE: This SAFE type offers investors a discount on the future valuation at the time of conversion into equity. For example, a discount of 20% means the investor will convert their investment into equity at a valuation 20% lower than the valuation of the subsequent financing round. 4. Valuation Cap SAFE: With a valuation cap, this SAFE provides investors with an upper threshold on the valuation while converting their investment into equity. This ensures that the investor's ownership percentage is not diluted excessively, protecting their potential return on investment. 5. Most Favored Nation SAFE: This variation aims to protect the investor by offering them the best terms in the subsequent financing rounds. If the company later offers better terms to subsequent investors, the initial investor automatically receives the updated terms, safeguarding their investment against potential disadvantages. It is important for both founders and investors to thoroughly understand the specific terms and implications of each type of Kings New York SAFE. Consulting with legal and financial experts is advised to ensure compliance and to tailor the agreement to the unique needs and circumstances of the company and its investors.