Colorado Term Sheet - Simple Agreement for Future Equity (SAFE)

State:
Multi-State
Control #:
US-ENTREP-008-1
Format:
Word; 
Rich Text
Instant download

Description

This term sheet summarizes the principal terms of the proposed Simple Agreement for Future Equity ("SAFE") financing of a Company, by certain Investors. This term sheet is for discussion purposes, is not binding on an Investor, nor is an Investor obligated to consummate the financing until a definitive SAFE agreement has been agreed to and executed. The term sheet does not constitute an offer to sell or an offer to purchase securities.
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FAQ

A SAFE is an agreement to provide you a future equity stake based on the amount you invested if?and only if?a triggering event occurs, such as an additional round of financing or the sale of the company. Be Safe?5 Things You Need to Know About SAFE Securities and ... - finra finra.org ? investors ? insights ? safe-securities finra.org ? investors ? insights ? safe-securities

Valuation caps can be established based on how much risk an investor is willing to take on with a SAFE?factors such as a proven product or incorporation can help to mitigate that risk. Valuation cap for SAFE Notes - Eqvista Eqvista ? SAFE Notes Eqvista ? SAFE Notes

A good example of a safe term sheet is one that gives both parties enough time to negotiate, but not so much time that it becomes an obstacle. This investment instrument allows investors to provide capital to a startup in exchange for the right to receive equity at a later date. What is a safe term sheet? - Vakilsearch vakilsearch.com ? blog ? safe-term-sheet vakilsearch.com ? blog ? safe-term-sheet

A valuation cap is a predetermined maximum company valuation at which an investor's SAFE will convert into equity. Essentially, it sets an upper limit on the valuation to determine how many shares the SAFE holder will receive when the SAFE converts. What Is a SAFE Valuation Cap? - Zegal zegal.com ? blog ? post ? negotiating-valuation-c... zegal.com ? blog ? post ? negotiating-valuation-c...

How to Prepare a Term Sheet Identify the Purpose of the Term Sheet Agreements. Briefly Summarize the Terms and Conditions. List the Offering Terms. Include Dividends, Liquidation Preference, and Provisions. Identify the Participation Rights. Create a Board of Directors. End with the Voting Agreement and Other Matters. How to Prepare a Term Sheet: A Step-By-Step Guide westchesterangels.com ? how-to-prepare-a-term-s... westchesterangels.com ? how-to-prepare-a-term-s...

A SAFE is an agreement to provide you a future equity stake based on the amount you invested if?and only if?a triggering event occurs, such as an additional round of financing or the sale of the company. Be Safe?5 Things You Need to Know About SAFE Securities ... finra ? investors ? insights ? safe-secu... finra ? investors ? insights ? safe-secu...

A SAFE note is simply a legally enforceable promise to allow an investor to buy a certain number of shares at a specific price at a later date. Valuation cap ? A valuation cap is a limit on how much a SAFE can be converted to equity ownership in the future. Valuation cap for SAFE Notes - Eqvista eqvista.com ? safe-notes ? founders-determine-val... eqvista.com ? safe-notes ? founders-determine-val...

Let's say an investor gives you $1 million on a post-money SAFE. The valuation cap (the maximum price at which you'll convert a SAFE note into equity in the future) on this SAFE is $10 million. Because it's a post-money SAFE, the investor has effectively locked in a 10% ownership stake in your company. Pre-Money SAFEs vs. Post-Money SAFEs - Carta Carta ? blog ? pre-money-and-post-money... Carta ? blog ? pre-money-and-post-money...

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Colorado Term Sheet - Simple Agreement for Future Equity (SAFE)