What This SAFE Agreement Template Covers

The SAFE agreement template is designed to facilitate investment between startups and investors, providing a clear framework for future equity arrangements. This template includes essential clauses such as Parties, Recitals, Investment Amount, Conversion Terms, Representations and Warranties, and Termination, ensuring both parties understand their rights and obligations.

When to Use a Simple Agreement for Future Equity

This simple agreement for future equity is ideal for startups seeking investment to fuel their growth. It is particularly useful when a startup is looking to secure funds quickly without the complexities of traditional equity financing. Investors can utilize this template when they want to provide funding in exchange for a promise of future equity, making it a streamlined option for both parties.

What's Included in This Investment Agreement Template

• Parties: Clearly identifies the investor and the startup, establishing who is involved in the agreement.
• Recitals: Provides context for the agreement, outlining the purpose of the investment.
• Investment Amount: Specifies the amount of money being invested, crucial for both parties to understand their financial commitments.
• Conversion Terms: Details how the investment will convert into equity, including any valuation caps or discount rates.
• Representations and Warranties: Ensures that both parties have made truthful statements regarding their capabilities and intentions.
• Termination: Outlines the conditions under which the agreement can be terminated, protecting both parties' interests.

Key Provisions of This Equity Financing Document

• Valuation Cap: This provision sets a maximum valuation at which the investment will convert into equity, protecting investors during high-growth phases.
• Discount Rate: Offers investors a discount on future equity, incentivizing early investment and rewarding risk-taking.
• Governing Law: Establishes which jurisdiction's laws will govern the agreement, providing clarity in case of disputes.

Disclaimer: This template is for informational purposes only and does not constitute legal advice.