Introduction
This article will help you create a SAFE within your account. If you're looking for a general overview of SAFEs, please visit this article.
Before we start, please remember that you should consult your legal counsel before entering into a SAFE with an investor.
How to create a SAFE?
Using the SAFE workflow, you can create a SAFE for each of your investors, and if needed, generate a board approval document to approve the financing.
The steps in the workflow are as follows:
- Identify whether these SAFEs will be part of a series (do you expect to issue SAFEs with these same terms to other investors later on?)
- Provide the names of your investors and the terms of each investor's SAFE (amount, conversion discount, valuation cap for that conversion, etc.)
- Define how you'd like your board to approve this financing
- Edit the email that the system will send to the investors (if you'd like)
Once these are done, you can send the documents you generated to your attorney for review. Then you'll be able to provide wire information so your investors have it handy when they're ready to send you money (at this time, money cannot be sent through the platform).
Once your board approves the financing, someone from the company signs each SAFE, and your investors sign their SAFEs, your financing is closed.
Frequently Asked Questions
How about an example?
A company is looking to raise $100,000 with SAFEs. There is an investor that will buy a SAFE for $50,000; but the rest of the investors are still unknown.
If the SAFE is part of a series, they can issue the SAFE to the investor for $50,000 when ready. When additional investors come along, they can invest using the same terms as the already issued SAFE.
If the SAFE is issued outside of a series, then each new investor may have different terms related to their investment.
What is the Amendment Threshold Percentage?
This question asks what percentage of the total investment amount must agree to amend the terms of the SAFE. So if the percentage is 50% and the fundraise is $100,000, the holders of SAFEs valued at more than $50,000 must approve whatever amendment is contemplated.
When will dates be applied to my documents?
When the last SAFE is signed in the workflow you're currently running, the signatures will be applied, and the documents will be dated. The date you enter on the Finalize Closing Date step at the end of the workflow will be the date applied to the SAFE.
Is the SAFE template pre-money or post-money?
The template is taken from the Y Combinator standard and is post-money.
Additional Resources
Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.
Screenshots are for illustrative purposes only.
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