101–110 of 118 posts
"The table below sets forth a comparison between the Standard Preferred and the SAFE Preferred, as each would be described in the company’s certificate of incorporation:"
Reading the SAFE it mentions "SAFE Preferred Stock" and seems to partially define it. Does this mean you must have "SAFE Preferred stock" defined in your articles of incorporation to use a SAFE, or can the SAFE stand alone?
Earlier quoted context omitted.
This is a great summary and outline of the evolution and differences of different investment structures. One of the concerns I've heard from many founders and funders is that convertible notes or securities can place the founders at odds with the early investors when it comes to company valuation. In this case, the concern still remains whether the conversion is a note or a security. The founders would want the compa…
Doesn't a discount align the incentives better? Is there active resistance to discounts in the investor community? Among angels at least, I personally haven't seen it...
The only real way to keep the early investors and founders exactly on the same page with regards to increases in valuation is to have the early investors convert as early as possible, or in other words, an ordinary equity / Series A style round. But this is something early founders are trying to avoid because of the uncertainty of the company value, the cost of the legal work, and requirements involved once you have third party investors.
Earlier quoted context omitted.
The notes have proliferated because they are quick and easy (no transaction costs, etc.) so it's the way many startups like to raise money. Priced rounds are fine too - they just tend to take more time and involve costs. YC and others have open-sourced streamlined equity financing documents, but so far, nothing has been as easy as raising on a convertible note.
clevy, I literally said in my comment I understand the advantages of notes . I don't need to be convinced. Notes are great. My question is different - to what extent investors find note financing acceptable/appealing? Is it only YC companies that get the privilege? Is it a Silicon Valley thing, not used much elsewhere (like Seattle)? Is it used everywhere, and I just happened to be unlucky with it?
I have a question about using this. In the SAFE Primer it states: "The table below sets forth a comparison between the Standard Preferred and the SAFE Preferred, as each would be described in the company’s certificate of incorporation:" Reading the SAFE it mentions "SAFE Preferred Stock" and seems to partially define it. Does this mean you must have "SAFE Preferred stock" defined in your articles of incorporation to…
Two questions: - in the acquisition of a company with an MFN SAFE, it says that the instrument can convert in to common at the fair market value of the stock. Isn't that the FMV the purchase price? So isn't that the same as getting your original money back (no matter how successful the company may become)? Regarding pro rata rights it says: Do SAFE holders get pro rata rights? This pro rata right must be in either th…
I have a question about using this. In the SAFE Primer it states: "The table below sets forth a comparison between the Standard Preferred and the SAFE Preferred, as each would be described in the company’s certificate of incorporation:" Reading the SAFE it mentions "SAFE Preferred Stock" and seems to partially define it. Does this mean you must have "SAFE Preferred stock" defined in your articles of incorporation to…
The SAFE Preferred Stock would be whatever you end up calling it in the charter - for example, Series AA (just something to differentiate it from the preferred stock being issued to the new money investors). So no, you would not actually call it "SAFE Preferred Stock" in your COI. Does that make sense?
A few thoughts (apologies up front for the somewhat longish technical aspects of the discussion): 1. YC has once again managed to innovate in fascinating ways that help promote startups. And, it should be said, the legal work behind formulating this instrument called a "safe" is both sophisticated and commendable. It is at once simple and subtle and it covers a lot of nuanced legal technicalities that must have requi…
Sorry but tl;dr
This is an example of one of the key things that sets YC apart from every other early stage investor. Like the startups they fund, they constantly improve their "product" to make something entrepreneurs want.