• August 2019
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SAFE Agreement

lawtrades services safe doc

Raise capital.

SAFE Y Combinator Docs are used by startups to raise capital during their seed financing. Speak with a LawTrades to get it customized or reviewed before signing.

– Ensure compliance

– Save money long term

– You get much more


What you need when raising capital

A SAFE (Simple Agreement for Future Equity) is a financing contract used by companies to raise capital in their seed financing rounds. A SAFE aims for long term stabilization by eliminating those features that make convertible debt risky. Unlike convertible notes, SAFEs are not a debt instrument and lack both a maturity date and an interest rate. SAFE agreements were created by Y Combinator and are intended to be simple and fair to both investors and founders, while preserving the flexibility of convertible notes. There are four versions of a SAFE and each are meant to be short and usually around five pages in length. This saves startups and investors a ton of time and legal fees on hammering out the details of a SAFE, but it’s always smart to have a simple agreement lawyer take a look before you sign.

The benefits
Confirm best form of funding

There are other attractive options for companies – like KISS documents and convertible notes – and a simple agreement lawyer can assess if those sources suit your business better or using SAFE Y Combinator docs.

Assurance you’re doing it right

Although a SAFE is meant to be simplistic, there are still mistakes to make. Also, it’s nice hearing from a simple agreement lawyer that the proposed terms of the agreement are fair and enforceable.

You have an attorney to turn to

There’s a good chance you’re going to like your simple agreement lawyer from LawTrades and want to keep using them. By setting up that relationship for SAFE Y Combinator Docs, you have a legal expert to turn to when in need.


FAQ


What’s the difference between convertible notes and SAFEs?

SAFE Y Combinator Startup Documents is like a convertible note in that the investor buys not stock itself, but the right to buy stock in an equity round when it occurs. A SAFE can have a valuation cap, or be uncapped, just like a note. However, unlike debt, a SAFE requires no fixed term or an interest rate. The overall setup of a SAFE requires less paperwork and formalities as well.

Can all types of businesses utilize SAFE documents?

No. One drawback of a SAFE agreement is that it requires a company to be incorporated, thereby restricting early stage LLCs from taking advantage of this agreement.

What are the different types of SAFEs?

There are four different versions of SAFEs: 1) Cap, no Discount; 2) Discount, no Cap; 3) Cap and discount; and 4) “Most Favored Nation” with no cap or discount.

What is a valuation cap? What is a discount?

A valuation cap (“cap”) entitles SAFE holders to convert into equity at the lower of the valuation cap or the price in the subsequent financing. A discount allows early investors the opportunity to purchase preferred stock at a cheaper rate at a future financing round.

What does a “Most Favored Nation” mean?

A most favored nation clause (also referred to as a “MFN clause”) allows a SAFE investor to elect more favorable terms that are offered to any subsequent investors following the original investor’s investment and prior to a next equity round.


Reviews 

 


Daniel, H. | ★★★★★

“Simple and trustworthy system. The project manager through text message is a good idea and helps a lot with the process, especially their timely response.”


Rafael, R. | ★★★★★

“I was very comfortable with the environment it was my first meeting and I knew it was on the right track I did understand my lawyer I was listening I did absorb the information given to me.”


Ori, A. | ★★★★★

“Great experience all around, LawTrades was just so much more personal and much better than other startup/online on-demand solutions for legal work,. Almost feels like I handpicked and hired the attorney myself. The Attorney was available to answer questions by phone or text message, so was the LawTrades rep who set the whole thing up. And when setting up new entities you always have questions, so this was a big deal for me. The Attorney assigned to my project was available on demand to help out explain things every step of the way and I think the guys at LawTrades have done a great job with making you feel extremely comfortable. After all was done I even got an email and a call from one of the co founders of the company to make sure I had a seamless experience. I never got a call from other companies I had used in the past like Legal zoom and the whole thing always felt so automated. Yes, granted Legal zoom probably have way more clients than Lawtrades and as such would not be feasible for their management to call everyone, however, that was a nice touch which I do appreciate. I will definitely be heading back to Lawtrades whenever I require legal assistance.”


Tamas, P. | ★★★★★

“Price. I know what I am paying instead of getting surprised. Transparent pricing I know what each bit costs instead of getting a big bill and not knowing what parts cost what and how much was for service vs hard fees such as filing fees. Also things progressed rapidly.”


Yash, P. | ★★★★★

“Amazing service, i cant get over texting to get a lawyer. it’s revolutionary and can legitimately improve the US justice system for people with no access to quality lawyers.”


Janet, S. | ★★★★★

“Quick and easy, I used LawTrades and worked with attorney Jonathan Hood to review a NDA. I got my questions answered right away. Arman was a great help making the connection. Would highly recommend the service.”