Simple Agreement For Future Equity FrancaisOctober 8, 2021 4:39 am
As a quasi-investment instrument, convertible borrowing leads above all to a paradoxical situation: investors whose objective and interest is to promote the development of the young company are confronted with the fact that the development of the company involves constraints typical of debt financing, including interest, which creates a risk of insolvency. If the investor structures his investment in a risk loan (the loan is repaid in cash and the hybrid part is an additional foosball), the company must also support guarantees and subordination mechanisms that are far too heavy and complex. The first equity financing event be be in common or preferred shares. In the United States, it is common in favorite shares. The investor wants to be a shareholder and, moreover, the name will show in the share register. SAFEs tend to be shorter and simpler, from 5 pages. Unlike a direct share purchase, shares are not valued at the time of signing the SAFE. Instead, investors and the company negotiate the mechanism by which future shares will be issued and postpone the actual valuation. . . .