A “SAFE” is an agreement between an investor and an entity that grants the investor rights to the company`s future equity, which are similar to a share warrant, unless a certain price per share is set at the time of the initial investment. The SAFE investor receives future shares in the event of an investment price cycle or liquidity event. SAFEs are supposed to offer start-ups a simpler mechanism to apply for upfront financing than convertible bonds. We have a standard agreement for all our investments. We invest $1250,000 in a “post-money” agreement for future capital, and we enter into an agreement with the company and the founders that defines certain specific YC guidelines and rights, including a right to participate in future corporate financing cycles (the “YC agreement”). Paul Graham and yCombinator recently created and publicly recommended the use of FAS in convertible bonds. For more information about SAFEs here: ycombinator.com/safe/. The new safe does not change two fundamental characteristics that we still consider important for startups: just after the #1 stage, YC should own 7% of the company. However, new depositors and the option pool should #2 step by step and #3 the YC safe and all other converted safes, provided these safes are standard post-money safes.
We have a right to participate pursuant to YC`s agreement to acquire up to 4% of the new securities issued in the financing. If we make use of our right to participate, #3 incorporates us a new additional investment. It is important to note that in the end, YC #3 with less than 7% ownership at the stage, even if we take our 4% participation fee. At the end of 2013, Y Combinator published the Simple Agreement for Future Equity (“SAFE”) investment instrument as an alternative to convertible debt.  This investment vehicle is now known in the U.S. and Canada because of its simplicity and low transaction costs. However, as use is increasingly frequent, concerns have arisen about its potential impact on entrepreneurs, particularly where several SAFE investment cycles take place prior to a private equity cycle and the potential risks to un accredited crowdfunding investors who could invest in the SAFes of companies that realistically never receive venture capital financing and therefore never generate equity in equity.  . Whether you`re using the safe for the first time or are already familiar with safes, we recommend reading our Safe User Guide. The Safe User Guide explains how the safe converts with sample calculations, as well as other details on the secondary letter pro-rata, explanations of other technical changes we made to the new safe (for example. B the language of tax processing) and suggestions for optimal use. Non-profit organizations receive a $100,000 donation.
We receive nothing in exchange for our donation. Safe conversion financing: In a price cycle, provided that all safes are on a post-monetary basis, 3 things usually happen at the same time, but the calculations are specially arranged: Another new feature of the safe refers to a “pro rata” right.