Simple Agreement For Future Equity Nederland

EPOS is essentially an agreement under which the investor is financed against the prevailing price per share (minus a discount and with heading), in exchange for the right to issue shares abroad. This is very similar to the convertible average, but unlike the converter, the EPOS is not a debt instrument (while the tax authorities might try to question it) and has successively no maturity date or interest. First, and most importantly, FASS do not have a due date. This can be a big problem for angel investors who invest money in a lateral business. In the absence of a due date, there is no mechanism for the start-up to repay the investor (or even encourage the founders to discuss the issue with their investor) or to force the founders to convert investors` money into equity. With a safe, the founder can keep investors` money on hold forever. 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 the 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 generate equity in equity. [5] Since the Y Combinator accelerator launched the SAFE or structured future capital agreement at the end of 2013, they have become a popular tool for pre-seed internship contracts, particularly on the West Coast.

While some investors love innovation, I`m with New York angel David Rose in his lack of enthusiasm for the new instrument. Angel investors are giving up too much by replacing their convertible bond with SAFEs. However, security holders have few of these rights or incentives to take over a business in their riskiest phase. In the event of a company`s insolvency, a SAFE holder, as a non-creditor or shareholder, has few fiduciary obligations related to the fate of the company and has no legal right to the fortune of a start-up (depending on the provisions imposed on SAFE). The exact conditions of a SAFE vary. However, the basic mechanics[1] are that the investor makes available to the company a certain amount of financing at the time of signing. In return, the investor will later receive shares in the company in connection with specific contractual liquidity events. The main trigger is usually the sale of preferred shares by the company, usually as part of a future fundraising cycle. Unlike direct equity acquisition, shares are not valued at the time of SAFE signing. Instead, investors and the company negotiate the mechanism with which future shares will be issued and defer actual valuation. These conditions generally include an entity valuation cap and/or a discount on the valuation of the shares at the time of triggering.

In this way, the SAFE investor participates above the company between the signing of safe (and the financing provided) and the triggering event. Keerzijde van de convertible, met name voor de investeerder, is dat hij wel al vol risico loopt maar nog niet volledig profiteert van de upside. Hij krijgt weliswaar een korting op de uitgiftekoers bij conversie, maar dit doet over het algemeen geen recht aan de waardesprong die de onderneming sinds hettrek versken van de convertiblet aan de eerstvolgende equity -round doormaakt. Given that it still takes some time for new initiatives such as this one to be adopted by conservative Dutch, similar instruments have so far been lacking in the Netherlands.

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