DealsJust Now Numerical Example: SAFE, cap and discount FundersClub
85% Off8 hours ago Investor has purchased a safe for $100,000. The Valuation Cap is $8,000,000 and the Discount Rate is 85%. The company has negotiated with investors to sell $1,000,000 worth of Series A Preferred Stock at a $10,000,000 pre-money valuation. The company’s fully-diluted outstanding capital stock immediately prior to the financing, including a 1,000,000 share option pool to be adopted in
Deals7 hours ago Numerical Example: SAFE, cap, no discount. A. 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. The company’s fully-diluted outstanding capital stock immediately prior to the financing
Deals8 hours ago Cap and discount in a Note or SAFE are discreet alternatives to one another. The cap value never changes. The discount only applies when the cap value isn’t reached. The less charitable view is that the elimination of the discount in Notes/SAFEs is a cynical power grab, pure and simple. It derives from a belief that early rounds in hot
$4 Off1 hours ago The question asks about two different scenarios: $4 million valuation cap, and 25% discount on an original YC Safe [original version was pre-money conversion], but my focus is on the interrelation between the valuation cap and discount because thi
Deals6 hours ago A valuation cap sets the highest price that can be used to set the conversion price. At the time of conversion, the investor can take advantage of either the discount or the valuation cap — whichever is more favorable. SAFEs can include a discount, a valuation cap, both, or neither.
20% Off5 hours ago ”) on or about [Date of Crowd SAFE] (the “Investment Date ”), WOW Studios Incorporated, a Washington corporation (the “ Company ”), hereby issues to the Investor the right to certain shares of the Company’s Capital Stock (defined below), subject to the terms set forth below. The “ Discount ” is 20%. The “ Valuation Cap ” is
100% Off9 hours ago Cap vs discount tables. The next tables I made show you when a cap or a discount would apply to the SAFEs. Red and cap means a cap applies. Ignore what happens when the discount is 100% since that is obviously silly. Obviously the higher the discount, the more likely it is that a discount will apply.
$1.5 Off9 hours ago OK, now we do a $1.5 million convertible note or SAFE with a valuation cap of $6 million. Same numbers as the above seed round, except it’s structured as a convertible security instead of an equity round. Because these are notes or SAFEs, there’s no dilution registered yet on the cap table. The dilution math is deferred until the Series A.
70% Off9 hours ago In the case of a Liquidation, the conversion of the SAFE is the same as a Standard SAFE with a Valuation Cap and NO Discount Rate. Example 1a: An investor has bought a SAFE for $ 300'000. The Valuation Cap is 4 million and the Discount Rate is 70%. There are currently 2 million shares of common stock outstanding.
Deals6 hours ago Select the Safe type (pre-money or post-money). Input the Principal, Valuation Cap, and Discount. (Share price, converted shares and Ownership percentage will populate automatically when the model runs calculations.) Convertible Notes. Input the Principal + assumed interest to be accrued, Valuation Cap, and Discount.
Deals3 hours ago Scenario 2: $5m Pre-money Valuation Cap, No Conversion Discount. Now consider how the ending cap table from Scenario 1 would differ if the convertible debt investor had a pre-money valuation cap of $5m. Using the same facts as the first scenario, the amount of stock issued to all shareholders except for the angel investor would remain the same.
DealsJust Now I don't think legally and contractually there are any downsides to a SAFE. It's simple. It gives zero control to the investors. It allows you to dilute investors on top of it however you want. It sometimes provides no pro-rata rights. No board sea
40% Off3 hours ago Example: SAFE with both valuation cap and discount. In cases when both the valuation cap and the discount clause is included in SAFE, the investor weighs both the options at the time of valuation and converts his SAFE at the lowest possible rate. Suppose XYZ LTD raised $50,000 from Mr C by issuing a SAFE with a $5M valuation cap and 40% discount.
Deals8 hours ago Download the Safe. There are four versions of the post-money safe intended for use by US companies, plus an optional side letter. As of March 2021, we’re unveiling beta versions of the “Valuation Cap, no Discount” post-money safe and optional side letter for companies formed …
Deals9 hours ago The company has made progress and would like to increase its cap to $12M pre (old SAFE)/ or $15M post (new SAFE). Let’s assume the company has 100 shares in its cap …
$8 Off5 hours ago Finally, to illustrate how the discount rate and the valuation cap can be used together, consider a scenario where all of the above details are the same except that both the discount rate above of 50 percent and a valuation cap of $8 million are built into the convertible note or SAFE. Calculating the discount from the valuation cap in this
Deals4 hours ago Both versions of the SAFE come in a few different “flavours”, being 1) with valuation cap, no discount, 2) no valuation cap, with discount, 3) valuation cap and discount, 4) no valuation cap, no discount, but with a most favoured nation provision.
20% Off4 hours ago The other thing investors commonly forget in the debate is their discount. The discount means the future equity round valuation can be higher than the cap and the investor will still convert at a valuation that’s lower than the cap. Let’s look at a convertible note example with a $4M cap and a 20% discount.
Deals2 hours ago This tool provides a template for a Simple Agreement for Future Equity (SAFE) with a valuation cap and no discount rate, also known as a "Standard SAFE" and can be adapted to suit your organization's needs. A safe is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date
Deals8 hours ago Similar to a convertible note, the Safe can be tailored to include a valuation cap, a discount or both (or neither), allowing it to be easily customized for the investor. Customizations may also include additional protections for major investors, such as rights of first offer (ROFO) , observer rights , information rights and other rights.
20% Off4 hours ago SAFE Investment: $500,000 Discount Rate: 20% Valuation Cap: $5,000,000 Shares Outstanding (prior to SAFE conversion): 3,000,000 Equity Investment Amount: $2,000,000. The above table illustrates the comparison between using the Valuation Cap and the Discount …
Deals1 hours ago SAFE: MFN, no Cap, no Discount: Equity: Cap, Discount, no interest, no repayment Debt: Cap, Discount, accrues interest, repayable at maturity : Treatment @ Financing: Automatic conversion to preferred stock when you raise an equity round of any size. Conversion price = lesser of cap or discount, if applicable. Automatic conversion to preferred
$10 Off5 hours ago cap and discount rate, dictates that the earlier investor gets the best result obtained by running the calculation in two ways (applying either the valuation cap or the discount) to determine the appropriate number of post-investment shares. Take, for example, a convertible note or SAFE that has a valuation cap of $10 million and a 20
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Deals1 hours ago SAFEs and Notes Represents ownership immediately after conversion, before the option pool increase and Series A investment. SAFEs Notes [[compHasOnlySafe ? 'SAFE Type' : 'Type']] Principal Valuation Cap Discount Pro-rata Pro-rata Amount Share Price Converted Shares Ownership after Conversion Ownership after Round [[ instrument.typeText ]]
$2.5 Off5 hours ago Opaque Ventures agrees to a $2.5 million SAFE with a 20 percent discount provision, and BlackBox Capital will invest $2.5 million in a SAFE that has a $10 million valuation cap …
Deals5 hours ago Startups and investors will usually only have to negotiate one item: the valuation cap. Because a safe has no expiration or maturity date, there should be no time or money spent dealing with extending maturity dates, revising interest rates or the like.
Deals8 hours ago If the SAFE has both a discount and cap, Investor will be issued Series A-1 preferred shares ("SAFE Preferred Stock") at either the Discount Price or the SAFE Price (i.e., Valuation Cap price) below, whichever results in greater # of shares.
20% Off3 hours ago Discount, No Cap - This is a SAFE with a negotiated Discount Rate, e.g., a 20% discount off the price per share of the Standard Preferred Stock, applied to the conversion of this SAFE …
Deals2 hours ago This tool provides a template for a Simple Agreement for Future Equity (SAFE) with a discount rate and no valuation cap and can be adapted to suit your organization's needs. A safe is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date, in connection with a specific event.
Deals8 hours ago Conversion Price: Either the Safe Price (Price Per Share = Valuation Cap/Company Capitalization) or Discount Price depending on which yields the most shares for investors.
Deals6 hours ago Since SAFEs aren’t debt instruments, they have no maturity dates or interest rates, but they do typically come with a valuation cap and/or conversion discount. However, unlike convertible notes, which require the company to raise a certain amount of capital for equity conversion, SAFEs typically convert at any dollar amount the company raises
Deals8 hours ago Safe Preferred Stock: The shares of preferred stock promised in the future at the point of an equity financing. The rights of this Stock will be identical to the Preferred Stock in the next equity financing other than the special rights outlined in this safe such as discount rate. Safe Price: Price Per Share = Valuation Cap/Company Capitalization
Deals9 hours ago hypothecated except as permitted in this safe and under the act and applicable state securities laws pursuant to an effective registration statement or an exemption therefrom. [company name] safe (simple agreement for future equity) post-money valuation cap with discount [ 
Deals5 hours ago Safes. The most popular replacement for convertible notes are safes (short for simple agreement for future equity), created by Y Combinator.Like convertible notes, safes can convert into preferred stock.. Types. There are three major types of safes - safes with a valuation cap, safes with a discount, and safes …
4% Off8 hours ago If a second SAFE is issued to another investor for $600,000 at a $15,000,000 post-money valuation cap, the new investor knows that its SAFE represents 4% of the company (i.e., $600,000 divided by $15,000,000), the first SAFE still represents 10% of the company, and the founder’s share has been diluted to 86%.
Deals1 hours ago 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. The SAFE investor receives the future shares when a priced round of investment or liquidity event occurs.
20% Off6 hours ago In the first example above where the discount was 20%, the cap was $5 million and the pre-money valuation was $10 million, we saw that the conversion price was …
50% Off6 hours ago It contains YC's latest safe version, post-money safe v1.1. To help a growing number of YC companies based outside of the U.S. (50% of the W21 batch), YC revised the most commonly used "Valuation Cap, no Discount” post-money safe and optional side letter for companies formed in Canada, the Caymans and Singapore in March 2021.
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20% Off7 hours ago For example, if the company offered SAFE note holders a 20% discount and achieves a valuation of $10 million, with shares available to new investors at $10, the SAFE investors will be able to buy their shares at $8, thus receiving a 20% discount. Valuation Caps: Another way for the investor to get a better price per share than future investors
15% Off3 hours ago the Conversion Cap: $4M. the Conversion Discount applied to the Pre-Money Valuation: 15% off of $5M = $4.25M. So we use the Conversion Cap valuation of $4M to convert. The Investors in the Convertible Debt round get 100,000 * ($500k / $4M) = 12,500 shares. Example 2: a VC invests $2.5M on a pre-money valuation of $4M.
20% Off6 hours ago The 20% discount would again result in an $8 per share price for note holders. Because dividing the $4M valuation cap by the $4.5M pre-money valuation and applying that to the $10 share price results in a higher $8.89 per share price for seed round investors, in this case it would be the discount that drives the conversion.
Numerical Example: SAFE, cap and discount. Investor has purchased a safe for $100,000. The Valuation Cap is $8,000,000 and the Discount Rate is 85%. The company has negotiated with investors to sell $1,000,000 worth of Series A Preferred Stock at a $10,000,000 pre-money valuation.
At the time of conversion, the investor can take advantage of either the discount or the valuation cap — whichever is more favorable. SAFEs can include a discount, a valuation cap, both, or neither. However, it is not common for either to be absent, as that would discourage investors.
Investor has purchased a safe for $100,000. The Valuation Cap is $8,000,000 and the Discount Rate is 85%. The company has negotiated with investors to sell $1,000,000 worth of Series A Preferred Stock at a $10,000,000 pre-money valuation.
This Safe is one of the forms available at https://ycombinator.com/documents and the Company and the Investor agree that neither one has modified the form, except to fill in blanks and bracketed terms. The new post-money SAFE Cap and Discount makes an effort to say that no one can change the document other than in the brackets.