A SAFE is designed to be 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 company at an early stage of the operation. SAFE agreements are a relatively new type of investment created by Y Combinator in 2013. These agreements are concluded between a company and an investor and create potential future equity in the company for the investor in exchange for immediate liquidity for the company. Safe converts into equity in a subsequent funding round, but only if a particular triggering event (described in the agreement) occurs. However, a major drawback is that holders of post-money SAFs would not participate in a dilution of future funding rounds until SAFE post-money bonds are converted into a discounted equity round. Because this dilution must go somewhere, it is carried by the founders and the first collaborators. And so it seems that any post-money-SAFE investor would get a better deal than most non-post-money-safe-owners on the cap table. In the Zegal app, you have four ways to convert safe into preferred shares during an equity financing: share rights are the rights of the SAFE investor to acquire other shares of the company if the company is conducting a new round of financing or financing. These rights can only be exercised after the SAFE has been converted into preferred shares of the company when financing equity. For example, if you run a SAFE before financing Series A, the SAFE will be converted into preferred shares of the Series A company. With the proportional rights, the investor has the right to acquire more shares if the company besieges a Series B financing at the same price and under the same conditions as the Series B investors. 1) the price per preferred share to be offered for equity financing; 2.

In principle, for pre-money-safe ratings, it was important for the parties to assess dilution and holding, to take into account the theoretical increase in shares compared to the option pool of the company in a subsequent equity round. Another innovation of the safe concerns a “proportional” right. The initial vault required the company to allow safe holders to participate in the funding cycle after the funding cycle into which the vault was transformed (e.g.B. If the safe has been converted into Series A preferred financing, a safe holder – now holding a sub-series of Series A Preferred Shares – would be allowed to acquire a proportionate portion of the Series B Preferred Shares). While this concept fits the original vault concept, it made less sense in a world where vaults have become independent funding cycles…