Safe: Valuation Cap, No Discount (Singapore)About the Safe Y Combinator introduced the safe (simple agreement for future equity) in late 2013, and since then, it has been used by almost all YC startups and countless non-YC startups as the main instrument for early-stage fundraising.Our first safe was a “pre-money” safe, because at the time of its introduction, startups were raising smaller amounts of money in advance of raising a priced round of financing (typically, a Series A Preferred Stock round). Safe: Valuation Cap, No Discount (Caymans) Safe: Valuation Cap, No Discount (Canada) Before using any of these forms, you should consult with a lawyer licensed in the relevant country. Safe: MFN, no Valuation Cap, no DiscountAs of March 2021, we’re unveiling beta versions of the “Valuation Cap, no Discount” post-money safe and optional side letter for companies formed in Canada, the Caymans and Singapore. Overview, Essential SAFe, Large Solution.
It’s critically important for founders to understand how much dilution is caused by each safe they sell, just as it is fair for investors to know how much ownership of the company they have purchased.The safe has two fundamental features that are critically important for startups:It allows for high resolution fundraising. The post-money safe has what we think is a huge advantage for both founders and investors - the ability to calculate immediately and precisely how much ownership of the company has been sold. By “post-money,” we mean that safe holder ownership is measured after (post) all the safe money is accounted for - which is its own round now - but still before (pre) the new money in the priced round that converts and dilutes the safes (usually the Series A, but sometimes Series Seed). While safes are being used for these seed rounds, these rounds are really better considered as wholly separate financings, rather than “bridges” into later priced rounds.In 2018 we released the “post-money” safe. But early stage fundraising evolved in the years following the introduction of the original safe, and now startups are raising much larger amounts of money as a first “seed” round of financing.
Before using any of these forms, you should consult with a lawyer licensed in the country where your company was formed.
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