A simple agreement for future equity (SAFE) is an agreement between an investor and a company that provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment.
Is a SAFE agreement a security?
SAFEs are considered to be securities, like stock and convertible notes, and are thus regulated by the SEC under the Securities Act of 1933 and Securities Exchange Act of 1934.12 Oct 2018
Is a SAFE agreement a loan?
Unlike a convertible note, a SAFE is not a loan; it is more like a warrant. In particular, there is no interest paid and no maturity date, and therefore SAFEs are not subject to the regulations that debt may be in many jurisdictions.Unlike a convertible noteconvertible noteIn finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value.https://en.wikipedia.org › wiki › Convertible_bondConvertible bond - Wikipedia, a SAFE is not a loan; it is more like a warrant. In particular, there is no interest paid and no maturity date, and therefore SAFEs are not subject to the regulations that debt may be in many jurisdictions.
How does a SAFE agreement work?
A SAFE is an agreement to provide you a future equity stake based on the amount you invested if—and only if—a triggering event occurs, such as an additional round of financing or the sale of the company.
What is a SAFE note agreement?
SAFE (or simple agreement for future equity) notes are documents that startups often use to help raise seed capital. Essentially, a SAFE note acts as a legally binding promise to allow an investor to purchase a specified number of shares for an agreed-upon price at some point in the future.
Is a SAFE agreement debt?
Is a SAFE Agreement Debt or Equity? SAFE agreements are neither debt nor equity. Instead, they're the contractual rights to future equity. These rights are in exchange for early capital contributions invested into the startup.
Are SAFEs debt or equity?
In 2013, Y Combinator created SAFE notes to simplify the process. SAFE notes are not debt; they're convertible equity. There's no loan or maturity date involved.6 Sept 2021
How do you account for a SAFE agreement?
https://www.youtube.com/watch?v=Qz_bW42BwGo
What type of security is a SAFE?
Some issuers have been offering a new type of security as part of some crowdfunding offerings—which they have called a SAFE. The acronym stands for Simple Agreement for Future Equity. These securities come with risks, and are very different from traditional common stock.