What Is Safe Agreement

It still allows high-resolution fundraising. Startups can enter into an investor as soon as both parties are ready to sign and the investor is willing to side up with money instead of trying to coordinate a single deal with all investors at the same time. In fact, it could be much easier now that founders and investors have more security and transparency in what each party gives and receives. The new safe doesn`t change two basic features that we still consider important to startups: our first safe was a „pre-money” safe, because at the time of its launch, startups raised small sums of money before raising a cheap financing cycle (usually an Ad Stock Round series). The safe was a quick and simple way to get the first money into the business, and the concept was that safe owners were only early investors in this future price cycle. But fundraising, staged early on, grew in the years following the introduction of the initial safe, and now startups are raising far more money than the first „seeds” funding cycle. While safes are used for these seed rounds, these towers are really better regarded as totally separate financing, instead of turning „bridges” into subsequent price cycles. Although the safe may not be suitable for all financing situations, conditions must be balanced with the interests of the start-up and investors in mind. As with the original safe, there are always trade-offs between simplicity and completeness, so that while not all Edge cases are addressed, we believe that the safe covers the most relevant and common issues. Both parties are encouraged to have their lawyers` safes checked if they wish, but we believe it provides a starting point that can be used in most situations without change. We believe in our first-hand experience, seeing and helping hundreds of companies raise funds each year, as well as the thoughtful feedback we received from founders, investors, lawyers and accountants with whom we shared the first designs of the post-money safe. To address these issues, Y Combinator introduced the idea of safe (Simple Agreement for Future Equity). A safe is an investment contract that not only simplifies the conditions for new startups, but also helps them achieve slightly better terms than with traditional financing opportunities.

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