SAFE is the new instrument for raising money
You want to raise money, but you don’t want to provide equity just yet because you have no way to value your company. You’ve thought about a convertible note, but you are worried about the possibility of having to pay back the loan amount and interest.
This is where SAFE (Simple Agreement for Future Equity) comes in. You can think of SAFE as a convertible loan, without the debt aspect. Essentially, an investor will pay a company for the right to convert that cash into shares when a ‘trigger event’ happens (a typical trigger event is the closing of an equity round). As a founder, you may find SAFE to be the desirable, simple and less risky option for you, but you need to understand what the best-practice is when negotiating the arrangement.
You should always remember the standard templates for SAFEs were prepared on behalf of investors, and not founders - as such, they are usually biased in favour of the investor.
You need to understand whether it's right for you
SAFEs carry benefits for both startups (who can delay their valuation) and for investors (who are rewarded with potentially discounted shares for investing early). For both parties, however, it is crucial that you understand the risks of pursuing this path and protect yourself as much as possible. Although SAFE has fewer terms than convertible notes, you must clearly define the ones that matter (terms, discount and exit event mechanisms), otherwise you leave yourself unaware of your obligations, your business targets, and the financial risk. Without understanding and establishing terms to be clear-cut, you may get bogged down by costly disputes internally and externally, halting your company’s growth (and your chances of raising again).
We assess your circumstances and make recommendations
UX Law are experts in all ways companies can attain finance. We can provide you with strategic legal guidance, creating and tailoring a SAFE note to achieve your financing needs. Every company and investor is different, so we’ll assess your circumstances, then draft and negotiate the key terms for you.
Frequently asked questions
Can I do this myself?
Are your documents automatically generated?
Is the price a fixed-fee?
Can I speak or meet with a lawyer, and will this cost extra?
What if I need this urgently?
This package doesn’t suit me, can I create my own one?
What if the document or advice I need isn’t on the website?
- Free consultation
- Done for you tailored legal documents to suit your needs
- Initial drafting and review + one round of amendments
- Practical legal advice
- Fast turnaround times (5-7 days)
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