Under a Simple Agreement for Future Equity (SAFE), the investment is converted into equity when there is a „equity financing,“ a „liquidity event“ or „a dissolution event.“ For a growing start-up, the company will probably find more money. As a start-up investor, I`m not interested in being reimbursed. The risk associated with a start-up is high, so I hope that in the event of a high risk, there will be a potential for a strong upward trend. That is why I would like my SAFE to be „converted“ to equity at a later date. Basically, as soon as someone decides to invest in the company in a „price cycle“, my SAFE becomes shares of the company. Equity financing is defined in SAFE as „bona fide transaction or series of transactions with the main purpose of raising capital, pursuan weens which the Company issues and sells Shares Preference at a fixed pre-money valuation.“ Unlike a convertible bond, there is no threshold or minimum amount for equity financing. (a) When the company obtains „equity financing,“ the investor receives preferred shares with the same rights and preferences as the preferred shares that the company must issue for equity financing (in this case, the processing price is the „safe price.“ See below); Another new function of the safe concerns a „prorgula“ right. The original safe required the company to allow holders of safes to participate in the financing round after the financing round in which the safe was converted (for example. B if the safe is converted into series group preferred actuators, a secure holder – now holder of a Series A preferred share subseries – is allowed to acquire a proportionate portion of the Series B preferred share). While this concept is consistent with the original concept of safe, it made no sense in a world where safes were becoming independent funding cycles. Thus, the „old“ pro-rata right is removed from the new safe, but we have a new model letter (optional) that offers the investor a proportional right in the preferential financing of Series A on the basis of the converted safe property of the investor, which is now much more transparent. Whether a start-up and an investor enter the letter with a safe will now be a choice that the parties will choose, and this may depend on a large number of factors. Factors to consider can (among other things) the amount of the safe purchase and the amount of future dilution that proportional duty can cause to the founders – an amount that can now be predicted with much greater accuracy if post-money safes are used.

1) the preferred share price to offer for equity financing; 2) the preferred share price that must be offered with a discount for equity financing; 3. the price per share determined by a pre-negotiated valuation ceiling (see below); or four. Option 2 or Option 3 below. With participation rights or participation rights, investors can invest additional funds to maintain their ownership during equity financing after the financing that initially converted SAFE into equity. If the investor exercises pro-rata rights, he pays the new price of the round and not the price he paid during the first safe transformation. A safe is simple and short. It saves you the trouble of negotiating and agreeing on the amount of equity financing, which is often quite difficult to reconcile between the investor and the business at an early stage of the business.