Wisconsin Simple Agreement for Future Equity (WI SAFE) is a legal document used by startups and early-stage companies in Wisconsin to raise capital while deferring the determination of valuation until a later date. As a financing tool, the WI SAFE provides investors with the opportunity to invest in a company in exchange for the right to obtain stock or other equity interests in the future, typically upon the occurrence of a trigger event, such as a future equity financing or a sale of the company. The WI SAFE is specifically designed to simplify the investment process and reduce transaction costs, making it an attractive option for both investors and startups. It is a relatively straightforward agreement that establishes the terms of the investment, including the amount invested and various rights and restrictions associated with the future equity. There are two main types of Wisconsin Simple Agreement for Future Equity: 1. WI SAFE (pre-Roman Valuation): This type of agreement determines the valuation of the company prior to the investment. The investor agrees to invest a certain amount of funds, and in return, receives a promise to issue equity in the company once a triggering event occurs. The investor's future equity stake is determined by the pre-agreed valuation of the company. 2. WI SAFE (Post-Money Valuation): In this variation of the agreement, the valuation of the company is determined after the investment has been made. The investor invests funds in exchange for a promise to issue equity upon the occurrence of a triggering event. The investor's future equity stake is calculated based on the post-investment valuation. This type of agreement provides flexibility in determining the investor's future stake, as it takes into account the potential dilution caused by future financing rounds. Both types of Wisconsin Simple Agreement for Future Equity share common key terms and provisions. These typically include the trigger events, conversion and equity rights of the investors, information and inspection rights, dispute resolution mechanisms, and certain representations and warranties made by the company. It is important for both parties involved in a Wisconsin Simple Agreement for Future Equity to seek legal counsel to ensure compliance with state regulations and to address specific clauses and terms based on their unique circumstances.
Wisconsin Simple Agreement for Future Equity
Description
How to fill out Wisconsin Simple Agreement For Future Equity?
If you want to total, acquire, or produce authorized papers templates, use US Legal Forms, the largest selection of authorized varieties, that can be found on the web. Take advantage of the site`s simple and hassle-free search to get the papers you will need. Different templates for enterprise and person purposes are categorized by types and says, or search phrases. Use US Legal Forms to get the Wisconsin Simple Agreement for Future Equity in a handful of mouse clicks.
When you are currently a US Legal Forms customer, log in for your account and then click the Down load key to obtain the Wisconsin Simple Agreement for Future Equity. You can also gain access to varieties you previously acquired inside the My Forms tab of the account.
Should you use US Legal Forms initially, follow the instructions beneath:
- Step 1. Make sure you have selected the shape for that appropriate metropolis/nation.
- Step 2. Use the Preview choice to check out the form`s articles. Do not forget about to read through the explanation.
- Step 3. When you are not happy using the develop, utilize the Research industry at the top of the screen to get other variations of your authorized develop design.
- Step 4. Once you have identified the shape you will need, go through the Buy now key. Select the costs plan you like and include your qualifications to register for the account.
- Step 5. Approach the financial transaction. You can utilize your bank card or PayPal account to accomplish the financial transaction.
- Step 6. Choose the format of your authorized develop and acquire it on the product.
- Step 7. Comprehensive, change and produce or indicator the Wisconsin Simple Agreement for Future Equity.
Every single authorized papers design you buy is the one you have forever. You might have acces to every single develop you acquired inside your acccount. Go through the My Forms segment and pick a develop to produce or acquire again.
Compete and acquire, and produce the Wisconsin Simple Agreement for Future Equity with US Legal Forms. There are millions of skilled and state-certain varieties you may use for the enterprise or person demands.
Form popularity
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.
Calculation ing to the Discount Rate The total shares are calculated ing to the SAFE money invested divided by the share price in the next round, multiplied by the discount rate. If we take our example above, if during the next financing round, the company raises money ing to a share price of $10. Intricacies of SAFEs (Simple Agreement for Future Equity) jdsupra.com ? legalnews ? intricacies-of-safe... jdsupra.com ? legalnews ? intricacies-of-safe...
SAFEs are generally considered taxable at the time of the triggering event, when the SAFE converts into equity (i.e. stock in the company). SAFE Tax Treatment: Guide for Startups and Investors - Pulley pulley.com ? guides ? safe-tax-treatment pulley.com ? guides ? safe-tax-treatment
Overall, giving up equity in a startup can be an effective way for founders to raise capital and attract talented employees. However, these benefits must be weighed against potential cons such as dilution of ownership and control, increased time commitment, higher expenses, and decreased long-term value.
Cons: SAFE investors assume most, if not all, of the risk, in that there is no guarantee of any equity ownership in the company. ... A SAFE holder is not entitled to any company assets in the event of a liquidation. SAFEs: The (Not So) Simple Agreement for (Potential) Future ... mintz.com ? insights-center ? viewpoints ? 2... mintz.com ? insights-center ? viewpoints ? 2...
A simple agreement for future equity delays valuation of a company until it has more performance data on which to base a valuation. At the same time, it promises an investor the right to buy future equity when a valuation is made. A SAFE can be converted into preferred stock in the future. Simple Agreement for Future Equity Pros and Cons Founders Network ? Blog Founders Network ? Blog
Like all early-stage investments, SAFEs can be especially risky because when you provide the funding, you don't end up owning anything. In the event of a liquidation or wind-down, you may get nothing if the SAFE hasn't already converted.
Due to the fact that SAFE notes are converted to equity only when the startup is able to raise funds for its next round, it carries a small amount of risk for investors. There is a chance that an investor's investment may never be converted into equity.