Simple Agreement For Future Equity Example Form D In Utah
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FAQ
You will need to print the completed form, have it notarized, and fax it to the SEC before obtaining your CIK and CCC numbers. The SEC provides you with these numbers by sending a message to the e-mail address required to be included in the completed information form.
An equity discount rate range of 12% to 20%, give or take, is likely to be considered reasonable in a business valuation. This is about in line with the long-term anticipated returns quoted to private equity investors, which makes sense, because a business valuation is an equity interest in a privately held company.
The SAFE discount is derived by dividing the valuation cap by the typical equity financing valuation and then removing that value from one (representing no discount). In this case, $2 million / $4 million = 0.5 and 1 – 0.5 = 0.5 would be the mathematical representations. Discounts often vary from 0% to 20%.
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%.
SAFE Example The SAFE investor would receive 6,250 shares under the 20% discount rate term in their agreement, or 15,000 shares if they had a valuation cap of $4 million. If an Investor had both features included in their SAFE agreement, the investor would likely choose the valuation cap and receive 15,000 shares.
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%.
By filing a Form D, you are providing investors with transparency and protecting them from potential fraud. Access to capital: Filing a Form D can help you raise capital for your business.
Form D is signed by the Auditor to support the value of shares. Name and address of seller. Name and address of the buyer. Sale value of the shares.
The Form D asks you to list specifics about your fundraising. This includes listing (a) “The Total Offering Amount” (the amount you want raise), (b) “The Amount Sold” (the amount you actually raised), and (c) “The Total Remaining to be Sold” (the amount you failed to raise, but are still trying to raise).
Privately held companies that raise capital are required to file a Form D with the SEC to declare exempt offering of securities. Many of these filings show investments in small, growing companies through venture capital and angel investors, and certain pooled investment funds.
