How does a SAFE work?

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Simple Agreement for Future Equity

Suffolk New York Simple Agreement for Future Equity

Name: Suffolk New York Simple Agreement for Future Equity
Brand: US Legal Forms
Rating: 4.81 (487 reviews)

Category:

Corporations - Startup - Venture Financing Process

State:

Multi-State

County:

Suffolk

Control #:

US-ENTREP-008-5

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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.

How to fill out Suffolk New York Simple Agreement For Future Equity?

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FAQ

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.

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A SAFE (Simple Agreement for Future Equity) is a convertible loan that does not have a debt component. SAFE is a contract (not a traditional loan) where an investor chooses to make a cash payment to a business in return for the negotiated right to turn that amount into stock if a predetermined trigger event occurs.

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.

SAFE stands for Simple Agreement for Future Equity. It was created by the team at Y Combinator and has been a popular method for investing at the earlier stage of a company. At the early stage of a startup, it can be difficult to accurately assign a value to the company because there is usually very little data.

SAFEs do not represent a current equity stake in the company in which you are investing. Instead, the terms of the SAFE have to be met for you to receive any shares in the company.

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.

These agreements are made between a company and an investor and create potential future equity in the company for the investor in exchange for immediate cash to the company. The SAFE converts to equity at a later round of financing but only if a particular triggering event (outlined in the agreement) takes place.

The acronym stands for Simple Agreement for Future Equity. These securities come with risks, and are very different from traditional common stock. Indeed, as the Securities and Exchange Commission (SEC) notes in a new Investor Bulletin, notwithstanding its name, a SAFE offering may be neither "simple" nor "safe."

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Suffolk New York Simple Agreement for Future Equity

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