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1

How do I recap a company with a large amount of SAFE's outstanding?

We have several SAFE's as investments in a company. Virtually all of the capital has been put in by our group.  What rights do we have as SAFE holders if there are issues or concerns with management actions? If you were the investor in this entity, how would you approach this situation?   

Top answer:

A priced round will convert the SAFEs. In addition, because you're the largest investor, you do have some leverage. Usually, the best thing to do is to hash this out with the founding team 1st. For example, you can get them to agree to d...

1

Lowering SAFE cap for larger tickets?

What is your advice/reaction to a founder that wants to issue two levels of SAFE notes? Level 1: Minimum Investment: $10,000  Conversion Terms: Convertible to stock in the Series A round at a $20 million pre-money valuation cap.   Level 2: Minimum Investment: $50,000  Conversion Terms: Convertible to stock in the Series A round at a $10 million pre-money valuation cap.

Top answer:

This is not a good approach and will cause 409a valuation issues for the founder. It's also incredibly difficult for them to explain this to future investors. Every investor in this round should come in on the same terms. Then, after the...

2

What are the differences between using SAFE in the UK and the US?

I believe they are often called ASAs (Advance Subscription Agreements) in the UK. Are there any fundamental differences in how they work in the UK and US?

Top answer:

Generally speaking, an Advanced Subscription Agreement (commonly known as an ASA and designed for use in the United Kingdom), is conceptually similar to a SAFE (originally designed for use within the United States).  However, there are ...

1

Standard Y Combinator SAFE agreement - error?

Regarding a typical Y Combinator SAFE agreement: In the event of an Equity Financing, who should be responsible for "execute and deliver all of the transactions documents related to the Equity Financing". The Investor or the Company? The current YC document put the responsibility on the SAFE Investor. But the SAFE Investor might not know the actual Terms of the Equity round agreed by the Company with the "new" Equity Investor. So it will be difficult for the SAFE Investor to provide those documents. I'm missing something here? Thanks!

Top answer:

Question: With respect to financing documents, what does an early-stage VC need to do at the time of a an Equity Financing (aka Preferred Stock Financing), if said VC invested earlier in a typical SAFE note? A standard, unaltered Y Com...