The lower the valuation cap, the more shares the SAFE investor can get per dollar invested. Discount Rate The discount rate gives the SAFE note investor a discounted price per share compared to the price paid by new investors in the next equity round of financing. For example, a 20% ...
If the Notes use avaluation cap, they effectively set a price because few VCs will want to exceed that cap in the next round. So, the startup founders may not necessarily be able to “avoid or defer” the valuation discussion. If the startup fails, SAFE Note investors are in anawkward...
For example, if a later investor receives a lower valuation cap or a higher discount, the MFN clause ensures earlier investors benefit from the same terms. This type of SAFE note is well-suited for early-stage startups anticipating multiple funding rounds. It reassures initial investors while ...
Delaying hard questions can lead to trouble.Delaying the “valuation question” is a double-edged sword. While it offers speed and flexibility, it also risks causing problems further down the line. For example, founders may offer a valuation cap that is low to close a SAFE investment quickly ...
Now, the two most important things about safe notes when it comes to the structure and the terms are either there is a cap, meaning you’re already establishing a valuation where they’re not going to go over when that conversion happens. Or, perhaps, the discount that you’re providing ...
Safe: Valuation Cap, No Discount (Singapore) Pro Rata Side Letter (Singapore) About the Safe Y Combinator introduced the safe (simple agreement for future equity) in late 2013, and since then, it has been used by almost all YC startups and countless non-YC startups as the main instrumen...
This article considers the tax treatment of the Y Combinator’s current post-money SAFE (Discount; no Valuation Cap).[15]Note that the Y Combinator SAFE template is often customized by the issuer or as a result of negotiations among the parties, and those changes could affect the instrument’...
Thanks. That makes things a bit more interesting. With the same example, the equity of 200K effectively generates a guaranteed savings of x% where x is the interest on the mortgage. x varies from property to property, but if lets say we fix x at 4%; does that mean its still feasible...
Please note that many of the numbers discussed below are rounded Example 1 Investor has purchased a safe for $100,000. The Valuation Cap is $5,000,000. The company negotiates with investors to sell $1,000,000 worth of Series A Preferred Stock at a $10,000,000 pre-money valuation. Th...
On the right however, you can see that the Post Money SAFE converts at the valuation cap you agreed with the SAFE investorminus the value of any existing SAFEs and other outstanding convertibles, so in this example that would be at a £1.8 million valuation. ...