Accredited Investor

What’s a SAFE, you ask?

     A SAFE, also known as Simple Agreement for Future Equity, is a legal contract that companies use to raise capital. Similar to warrants, SAFEs delay the company’s valuation until a future date while providing the investor with the opportunity to invest or the company to raise capital.

     Using a SAFE, the investor invests money in the company and, in exchange for the money, the investor receives the right to purchase stock in a future equity round subject to certain parameters set out in the SAFE.

SAFE Features

     SAFEs commonly have the following features:

      • SAFEs allow for more rapid fundraising; deals can close as soon as both parties are ready to sign and the investor is ready to invest money;
      • SAFEs save companies and investors money in legal fees and reduced time in negotiating the terms of the deal;
      • SAFEs have no expiration or maturity date until a conversion event occurs;
      • SAFEs have no interest rate, no accrued interest;
      •  SAFEs automatically convert on any priced shares issue; and,
      • Companies and investors will usually have to negotiate only the valuation cap.

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