Simple Agreement for Future Equity

October 17, 2017

 

 

(SAFE) Agreement

 

Inspired by the Y Combinator Agreements, a SAFE grants an investor the right to purchase equity at a future date. The MKG Enterprises Corp SAFE is designed for MKG Enterprises Corp Leading mobile tax refund tech startup raising under Regulation Crowdfunding.

 

Investor Relations www.mkgtax.com/investors

 

 

 

 

 

How is a SAFE different than a convertible note?
 

Unlike a convertible note, a SAFE is not a loan. As such, it does not accrue interest or have a maturity date. This makes things simpler and negates much of the need to amend the agreement in the future. For example, it helps startups not waste time extending maturity dates or revising interest rates, if a Series A financing takes longer than you first expect. It also better aligns with the intention of most equity investors, who never intended to be lenders.

 

 

How does the MKG Enterprises Corp SAFE deal with Reg Crowdfunding?
 

We feel Regulation Crowdfunding requires a SAFE with several extra protections not common in Regulation D fundraises with accredited investors. The Wefunder SAFE:

  • Has Repurchase Rights. The company may opt to repurchase an investor's SAFE at any time prior to conversion at Fair Market Value, as determined by an appraiser the company chooses. This mitigates any potential holdups during follow-on venture financing. It also acts as a safeguard if an investor has a conflict of interest, such as being employed by a competitor.

 

  • Can be Amended by One Lead Investor. The lack of a maturity date and interest rate negates the need for common amendments of convertible note financings. However, if an extraordinary situation requires an amendment, you will not be required to chase down hundreds of signatures. The company designates a Lead Investor Representative, and all investors agree to allow that person to unilaterally amend the SAFE.

 

  • Grants CEO Power of Attorney for Minor Shareholders. Once the SAFE converts into equity, investors who are not Major Shareholders grant the then-current CEO a power of attorney to vote all shares and execute any documents on their behalf. This mitigates the potential problem of hundreds of minor shareholders slowing down follow-on financings.

 

  • Investors Represent They Follow Investment Limits. All investors indicate if they are accredited or unaccredited. They represent they are in compliance with the investment limitations of Regulation Crowdfunding.

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