This article will help you create a SAFE within your account. If you're looking for a general overview of SAFEs, please visit this article.
Before we start, please remember that you should consult your legal counsel before entering into a SAFE with an investor.
How do I create a SAFE?
Using the SAFE workflow, you can create a SAFE for each of your investors, and if needed, generate a board approval document to approve the financing.
The steps in the workflow are as follows:
- Identify whether these SAFEs will be part of a series (do you expect to issue SAFEs with these same terms to other investors later on?)
- Provide the names of your investors and the terms of each investor's SAFE (amount, conversion discount, valuation cap for that conversion, etc.)
- Define how you'd like your board to approve this financing
- Edit the email that the system will send to the investors (if you'd like)
Once these are done, you can send the documents you generated to your attorney for review. Then you'll be able to provide wire information so your investors have it handy when they're ready to send you money (at this time, money cannot be sent through the platform).
Once your board approves the financing, someone from the company signs each SAFE, and your investors sign their SAFEs, your financing is closed!
How about an example?
Let's say Jane wants to raise $100,000 with SAFEs, and she knows investor Joe will buy a SAFE for $50,000; but, she doesn't know who all the rest of the investors are yet.
If Jane sells SAFEs as part of a series, she can sell Joe a SAFE for $50,000 when he's ready. When additional investors come along, Jane can say to them that the terms of the SAFE are set, and they'll be agreeing to the same terms Joe got.
If Jane sells SAFEs that are NOT part of a series, she can sell Joe his $50,000 SAFE with terms they've agreed on, and agree to completely different terms with the other investors who come along at a later date.
What is the "Amendment Threshold Percentage"?
This question asks what percentage of the total investment amount must agree to amend the terms of the SAFE. So if the percentage is 50% and the fundraise is $100,000, the holders of SAFEs valued at more than $50,000 must approve whatever amendment is contemplated.
When will dates be applied to my documents?
When the last SAFE is signed in the workflow you're currently running, the signatures will be applied, and the documents will be dated. The date you type in on the "Finalize Closing Date" Screen at the end of the workflow will be the date applied to the SAFE.
Is the SAFE template pre-money or post-money?
The template is taken from the Y Combinator standard and is post-money.
Additional Resources:
Fidelity does not provide legal or tax advice.
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