Form of SAFE (Simple Agreement for Future Equity) 2025

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An SAFT is an investment contract between investors who provide capital and developers who issue the s after specific conditions are met. An SAFE is a contract where investors provide capital in exchange for equity in a company at a future date.
The Discount Rate is calculated as 100% minus the percent discount the SAFE investors are entitled to. For example, if SAFE investors are entitled to a discount of 20% (they can buy Standard Preferred Stock 20% cheaper than subsequent investors), the Discount Rate is 80% [= 100% - 20%].
They are accounted for as equity on the balance sheet. When the Simple Agreement for Future Equity converts to preferred stock, the accounting entries are that the SAFE entry is removed and the amount is credited to preferred equity (ignoring any APIC implications).
The subscription agreement is required when launching a private equity fund. It is a binding legal agreement among the fund, the funds GP and each prospective fund investor setting out the basis on which a prospective investor will be admitted to the fund as an investor/limited partner.
Specifically, the Subscription Agreement for Future Equity Discount only enables investors to pay in advance the subscription price for company shares/quotas (typically pre-seed and seed funding) with such shares/quotas to be issued by the company receiving the investment at a later date, so that valuation of the

People also ask

A SAFE (Simple Agreement for Future Equity) is a legal contract between a startup and an investor that allows the investor to purchase equity in the company at a future date (typically during your companys next priced round or during a liquidity event).
A SAFE (or Simple Agreement for Future Equity) is an advance subscription for shares. The company receiving the subscription receives cash from an investor, but that investor doesnt receive any shares until further down the line. They are also often called ASAs (Advance Subscription Agreements) in the UK.

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