What is SAFE note?

SAFE (or simple agreement for future equity) notes are documents that startups often use to help raise seed capital. Essentially, a SAFE note acts as a legally binding promise to allow an investor to purchase a specified number of shares for an agreed-upon price at some point in the future.

When would you use a convertible note?

Conversion Provisions: The primary purpose of a convertible note is that it will convert into equity at some point in the future. The most common method of conversion occurs when a subsequent equity investment exceeds a certain threshold. This is called a qualified financing.

Are SAFE note holders creditors?

It is not debt and, unlike a convertible promissory note, accrues no interest and has no maturity date. However, in a downside scenario, like holders of unsecured debt, a holder of a SAFE is an unsecured creditor with status subordinate to any secured debt but senior to equity holders.

What is the safest convertible?

What are the safest convertibles you can buy?

• 2016 Volkswagen Beetle Convertible 1.8T S. Updated Aug 28, 2017.
• 2016 Porsche Boxster. Updated Aug 28, 2017.
• 2016 Mercedes-Benz SLK Class SLK300.
• 2016 Mercedes-Benz E Class E400.
• 2016 Fiat 500 C Pop.
• 2016 BMW M4.
• 2016 BMW 4 Series 428i SULEV.
• 2016 BMW 2 Series 228i SULEV.

What is SAFE note funding?

What is an iSAFE Note? “iSAFE” stands for India Simple Agreement for Future Equity. An investor makes cash investment in return for a convertible instrument. An iSAFE note is not a debt instrument, a founder friendly convertible security note, that is beneficial for both startups and investors.

What is a discount rate on a SAFE note?

The Discount Rate is defined at the top of the SAFE, and usually something like 80\%. If the startup’s valuation at the Series A is lower than the Valuation Cap, the Safe Investors will be paying for their Series A shares at the Discount Price (the Series A price multiples by Discount Rate).

Is SAFE considered debt?

SAFEs are neither equity nor debt – they represent a contractual right to future equity, in exchange for which the holder of the SAFE contributes capital to the company. In addition, SAFEs do not accrue interest.