The tools for startup financing develop over the years.
Recently, the tool that becomes more and more popular for startups
financing is the SAFE – Simple Agreement for Future Equity.
In the Safe framework, the investor grants the company an
investment and in consideration receives from the company an
obligation to be issued shares upon the occurrence of a round
(usually at a discount and subject to a maximum price). The SAFE is
considered a financing tool favorable to the startup and
founders.
What Should Investors Note?
The typical SAFE is not a simple tool. It is a 6 pages legal
document full of definitions, detailing when and how the loan shall
convert in a variety of scenarios. In several cases, I was involved
in SAFE negotiations that lasted for weeks.
