Frequently Asked Questions About SAFE Agreements
What is a SAFE Agreement?
A SAFE (Simple Agreement for Future Equity) is an investor-friendly tool that allows you to invest in our company today in exchange for equity in the future. Unlike traditional equity investments, SAFEs are simple, flexible, and designed to help startups raise funds efficiently.
How Does a SAFE Agreement Benefit Me as an Investor?
By investing through a SAFE, you secure the right to equity when we raise our next financing round. This means you’ll receive shares at a favorable price, either through a valuation cap or a discount rate, ensuring early investors like you are rewarded for taking an early bet on our growth.
Why Are SAFE Agreements Popular for Startups?
SAFE agreements are widely used by startups for their simplicity and speed. They eliminate the complexities of traditional fundraising by offering:
- No fixed repayment dates.
- No debt or interest accrual.
- Clear, transparent terms for conversion into equity.
What Are the Key Features of Our SAFE Agreement?
1. Valuation Cap
Your investment secures equity based on a capped valuation, ensuring you benefit if our company’s value increases before the next funding round.
2. Discount Rate
You may receive equity at a discounted price compared to future investors in our next priced equity round.
3. Conversion Events
Your SAFE converts into equity during:
- Our next qualified financing round.
- A company exit, such as an acquisition or IPO.
What Happens If the Company Doesn’t Raise Another Round?
If we don’t raise another round or experience an exit, your investment will remain as a SAFE and won’t convert into equity. While we are committed to scaling, it’s essential to understand the associated risks.
Why Did We Choose SAFE Agreements for This Fundraising?
SAFE agreements align our goals with yours as an investor. They allow us to focus on building the company while offering you the opportunity to invest in our success with fewer legal complexities and costs.
How Do I Review or Participate?
Participating in our SAFE round is straightforward:
- Review the agreement terms provided.
- Reach out with any questions.
- Sign and fund your investment to secure your place in this opportunity.
If you’re ready to join us on this journey, contact us here or follow the instructions in our investor portal.
Still Have Questions?
We’re here to help. If you have additional questions about SAFE agreements or how they work, get in touch, and we’ll guide you through every step.