Simple Agreement For Future Equity Cap

admin | 08 October 2021 | Uncategorized | | 0 Comments   

In addition to the absence of valuation requirements, such as convertible bonds. B the terms of the SAFE arrangement may include valuation caps and share price discounts in order to offer a lower price per share than subsequent venture capital (VVC) investors or acquirers at that liquidity event. This is fair, because previous investors take more risks than later investors by pursuing the same equity. At Dorm Room Fund, we invest with unsused SAFS without discount, but with an MFN clause. This means that if the SAFE is converted into equity, the founders end up having more of the company than if there was a cap or discount. If new investors buy shares for $1.00, it`s also the Dorm Room Fund. To complicate matters a bit, a SAFE sometimes has a discount. There`s also no maturity date, which means investors have to wait indefinitely before they can get their hands on the equity they buy – if that ever happens…