Simple Agreement For Future Equity Template In Wake
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A Simple Agreement for Future s is a contract between a blockchain developer and a buyer, who contributes a certain amount of capital for the promise of an equal amount of s when the project meets specific goals. An SAFT is similar to an SAFE, which is for equity.
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).
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%.
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%.
TL;DR: A Simple Agreement for Future s (SAFT) is a legal contract used by blockchain startups to raise funds by selling the right to receive s at a future date.
