Investor: [Investor's Name]
Startup: [Startup Name]
Date: [Date]
1. Investment Amount: The Investor agrees to invest $100,000 USD (the “Investment Amount”) in the Startup, pursuant to the terms and conditions of this SAFE.
2. Valuation Cap: The SAFE will have a valuation cap of $5,000,000 USD (the “Valuation Cap”). This means that in any future equity financing round in which the Company issues equity securities, the Investor's SAFE will convert into equity at a price per share no greater than the Valuation Cap, subject to any applicable discount.
3. Discount Rate: The Investor will receive a 20% discount (the “Discount Rate”) on the price per share of the Company's equity securities issued in the next qualified financing round following this investment, or in the event of a qualifying transaction as defined in this SAFE.
4. Qualifying Financing Round: A “Qualifying Financing Round” is defined as an equity financing round in which the Company raises at least $1,000,000 USD in aggregate gross proceeds. It does not include debt financings, convertible notes, or SAFE offerings.
5. Conversion: Upon the occurrence of a Qualifying Financing Round or a qualifying transaction, the Investor's SAFE will convert into equity in the Company at a price per share determined by applying the Discount Rate to the price per share in the Qualifying Financing Round, provided that such price per share does not exceed the Valuation Cap.
6. Maturity Date: This SAFE does not have a maturity date, and there is no obligation for the Company to repay the Investment Amount unless a triggering event as defined in this SAFE occurs.
7. Governing Law: This SAFE is governed by the laws of [State/Country], without regard to its conflict of laws principles.
8. Other Provisions: This SAFE may contain other customary provisions, including representations and warranties, covenants, and dispute resolution mechanisms, as negotiated between the parties.
9. Signatures: This SAFE is executed as of the date first above written.
Investor: Signature: _ Printed Name: _
Startup: Signature: _ Printed Name: _
Creating a safe contract with a discount and a vesting period for a $100,000 investment typically involves customizing the terms and conditions within a Simple Agreement for Future Equity (SAFE) agreement. SAFEs are commonly used in startup financing to provide investors with the option to convert their investment into equity at a later date. Here's an example of a simplified SAFE contract with a 20% discount and a 12-month vesting period for a $100,000 investment:
SAFE AGREEMENT
Investor: [Investor Name] Company: [Startup Company Name] Date: [Date]
1. Investment Amount: The Investor shall invest the sum of $100,000 (the “Investment Amount”) into the Company.
2. Valuation Cap: There is no valuation cap associated with this SAFE agreement.
3. Discount Rate: The Investor is entitled to a discount of ( 20% on USD, 30% on PKR ) on the price per share payable by other investors in a future qualified financing round.
4. Vesting Period: The Investment Amount shall vest over a 12-month period, with 1/365th of the Investment Amount vesting on 00:01 of each day of the year.
5. Conversion into Equity: Upon the occurrence of a qualified financing round (as defined below), the Investment Amount, plus any accrued and unpaid interest, shall convert into equity at a price per share that is 20% less than the price per share paid by other investors in the financing round.
6. Qualified Financing Round: A qualified financing round is defined as a financing round where the Company raises at least $[Minimum Amount] in a single transaction at a post-money valuation of at least $[Minimum Valuation].
7. Repayment: If a qualified financing round does not occur within 36 months from the date of this SAFE agreement, the Company shall repay the Investment Amount, plus any accrued and unpaid interest, to the Investor.
8. Miscellaneous: a. This SAFE agreement is governed by the laws of [State/Country]. b. Any dispute arising under or in connection with this SAFE agreement shall be subject to arbitration in accordance with [Arbitration Rules]. c. This SAFE agreement may only be amended in writing and signed by both parties.
This is a simplified example of a SAFE agreement. In practice, it's important to consult with legal professionals to draft a contract that complies with relevant laws and regulations and to ensure it reflects the specific terms and conditions agreed upon between the investor and the startup. Additionally, it's crucial to consider any tax implications and consult with financial advisors before entering into such an agreement.