Our updated safes are post-money safes. By “post-money” we say that the safe owner is measured by post, all the safe money is accounted for – which is now his own trick – but before (before) the new money in the price cycle that transforms and dilutes the coffers (normally series A, but sometimes the Seed series). The post-money safe has what we think is a great advantage for founders and investors – the ability to calculate immediately and exactly how much property the company has been sold. For the founders, it is essential to understand how much dilution is caused by each chest they sell, just as it is fair for investors to know how much they have bought ownership of the business. A “SAFE” is an agreement between an investor and an entity that grants the investor rights to the company`s future equity, which are similar to a share warrant, unless a certain price per share is set at the time of the initial investment. The SAFE investor receives future shares in the event of an investment price cycle or liquidity event. SAFEs are supposed to offer start-ups a simpler mechanism to apply for upfront financing than convertible bonds. Safe conversion financing: In a price cycle, provided that all safes are on a post-monetary basis, 3 things usually happen at the same time, but the calculations are specifically ordered: We have a standard agreement for all our investments. We invest $1250,000 in a “post-money” agreement for future capital, and we enter into an agreement with the company and the founders that defines certain specific YC guidelines and rights, including a right to participate in future corporate financing cycles (the “YC agreement”). The next date in post-money-SAFEs is usually the date on which the start-up cancels a price-action cycle, usually their A-series. Safe standard agreements also provide for other major events, such as the founders who sell the business or close the store.
There are four versions of the new post-money safe as well as an optional letter of receipt. Our first safe was a “pre-money” safe, because at the time of its launch, startups collected smaller sums of money before collecting a funding cycle (typically a Preferred Stock Round Series). The safe was a quick and simple way to get the first money into the business, and the concept was that safe owners were only early investors in this future price cycle. But fundraising, staged early on, grew in the years following the introduction of the initial safe, and now startups are raising far more money than the first “seeds” funding cycle. While safes are used for these seed rounds, these towers are really better regarded as totally separate financing, instead of turning “bridges” into subsequent price cycles. The new safe does not change two basic functions that we consider important for startups: okay. Now we understand the sAFes and how they are built. We`ll talk about dilution and understand how your cap tables work. All right. So we`re going to go through that process.