Y Combinator Agreements

SAFE is synonymous with Simple Agreement for Future Equity. It`s a smart way for startups to raise debt-free seed funds. Startups are now entering into agreements with investors to obtain a certain amount of money in exchange for shares that the investor will receive at a later date. The next date in post-money-SAFEs is usually the date on which the start-up cancels a price-action cycle, usually their A-series. Safe standard agreements also provide for other major events, such as the founders who sell the business or close the store. The post-money valuation cap is one of the most popular types of SAFEs, but there are also discount SAFEs (where the investor receives shares on the basis of a discount instead of a valuation cap), the valuation ceiling and discount SAFEs (where the valuation cap and discount are taken into account) or Most Favored Nation (MFN) SAFEs. The new SAFE forms after YC money can be downloaded here. We have a standard agreement for all our investments. We invest $1250,000 in a “post-money” agreement for future capital, and we enter into an agreement with the company and the founders that defines certain specific YC guidelines and rights, including a right to participate in future corporate financing cycles (the “YC agreement”).

Finally, it is sometimes difficult to compare the offers of different accelerators. What is important is that we do not charge companies fees to be part of YC. We understand the complex reasons why some accelerators levy royalties on companies that participate in their programs and, while we do not believe this is bad behaviour, founders should naturally deduct these costs from the investment when considering these offers. We also strive to avoid all terms “gotcha” such as improved yields in downside exit scenarios and similar provisions. Unlike a convertible loan, a SAFE is not a loan; It`s more like an arrest warrant. In particular, no interest or due date is paid and SAFes are therefore not subject to the rules under which debts may be in many jurisdictions. This simplicity is the main motivation of a SAFE. “Safes should work in the same way as convertible notes, but with fewer complications,” says startup accelerator Y Combinator. We invest in U.S., Cayman, Singaporean and Canadian companies.

We have founders applying for YC from around the world, and many have already become familiar with their home countries. We present to the founders lawyers who can develop the best process for setting up a business (or parent company) in a jurisdiction in which we can invest. Often, the founders retain their original unit as a subsidiary of a new parent company and the original unit will continue to operate in their home country. At the end of 2013, Y Combinator published the Simple Agreement for Future Equity (“SAFE”) investment instrument as an alternative to convertible debt. [2] This investment vehicle is now known in the U.S. and Canada because of its simplicity and low transaction costs. However, as use is increasingly frequent, concerns have arisen about its potential impact on entrepreneurs, particularly where several SAFE investment cycles take place prior to a private equity cycle[4] and potential risks to un accredited crowdfunding investors who could invest in the SAFes of companies that realistically, never receive venture capital financing and therefore never convert to equity. [5] YC Batch Investment: We invest $1250,000 in return for 7% of your business with a simple “post-money” agreement for the future (the “YC Safe”). We think 125k is currently the right amount for founders to run their business and pay expenses for about 5-6 months, and sometimes even more.