A SAFE is a simple agreement with a document that helps startups avoid many of these problems. Unlike a debt note, it is not debt and does not come with interest or a maturity date. In addition, the valuation of the company is postponed to a later date, so that the founders are not required to accept the lower valuation, which is accompanied by an early-stage equity funding cycle. In fact, even some experienced angel investors care less about business conditions than about the brilliance of the business concept, the founders` ability to implement their plan, and the market`s growth potential for the company`s product or service. While the vault may not be suitable for all funding situations, the conditions must be balanced, taking into account both the interests of the startup and investors. As with the original vault, there are still trade-offs between simplicity and completeness, so not all marginal cases are addressed, but we think the vault covers the most relevant and common issues. Both parties are encouraged to have their lawyers check the vault if they wish, but we believe it offers a starting point that can be used in most situations without change. We stick to this belief because we have seen hundreds of companies first-hand every year and helped them raise funds, as well as based on the thoughtful feedback we received from founders, investors, lawyers and accountants with whom we shared the first designs of the post-money vault. Y Combinator, a well-known technology accelerator, created the SAFE rating (simple agreement for future equity) in 2013 and uses it to fund most of the Seed phase startups participating in its three-month development meetings. Since 2005, Y Combinator has funded more than 1,000 startups, including Dropbox, Reddit, WePay, Airbnb, and Instacart. Whether you are using the safe for the first time or already have safes, we advise you to read our Safe User Guide (a substitute for the original Safe Primer).
The Safe User Guide explains how the vault is converted, with sample calculations as well as other details about the proportional secondary letter, explanations of other technical changes to the new vault (e.g.B. Language for tax treatment) and suggestions for the best use. The SAFE note was originally written by Carolynn Levy, a lawyer and partner at Y Combinator. Here are the most important terms that are presented in safe: the new vault does not change anything to two fundamental features that we believe remain important for startups: while these are some of the most important benefits for the founders of a startup, SAFEs also offer benefits to investors. There is a risk of offering financing to an unproven business, so there must be some benefits to attract investors. In general, the advantage for investors is that they have the right to buy shares on advantageous terms at a future event. . . .