Simple Agreement For Future Equity Example For Company In Middlesex
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Cisco Adaptive Security Appliance (ASA) Software is the core operating system for the Cisco ASA Family. It delivers enterprise-class firewall capabilities for ASA devices in an array of form factors - standalone appliances, blades, and virtual appliances - for any distributed network environment.
A simple agreement for future equity (SAFE) is a financing contract that may be used by a startup company to raise capital in its seed financing rounds. The instrument is viewed by some as a more founder-friendly alternative to convertible notes.
Our ASA, which we call a Convertible Equity Campaign, is our version of this. It's an easy-to-use, S/EIS-friendly convertible instrument. It's similar to a SAFE which is commonly used in the United States, but ASAs are designed specifically for UK companies.
An ASA can be considered the UK version of a SAFE and it's compliant with UK law. SAFEs, on the other side, are designed to be legally compliant with US law.
ASAs are very similar to SAFEs (Simple Agreements for Future Equity) and often the two terms are used interchangeably. The key difference is that SAFEs are a product of the American venture capital markets and therefore are more 'US-looking' documents. Essentially, an ASA is the UK version of a SAFE.
The Discount Rate is calculated as 100% minus the percent discount the SAFE investors are entitled to. For example, if SAFE investors are entitled to a discount of 20% (they can buy Standard Preferred Stock 20% cheaper than subsequent investors), the Discount Rate is 80% = 100% - 20%.
For example, if a SAFE has a valuation cap of $10 million, and your startup's next financing round values the company at $15 million, the SAFE investor's equity will be calculated based on the $10 million cap, not the $15 million valuation.
They are accounted for as equity on the balance sheet. When the Simple Agreement for Future Equity converts to preferred stock, the accounting entries are that the SAFE entry is removed and the amount is credited to preferred equity (ignoring any APIC implications).
