As an Australian startup, one of the biggest things you’ll be thinking about during your business venture is, ‘How am I going to raise capital?’
A lot of concepts come into play here, but the main one is getting funding from investors. If you want to finance your startup venture, you can offer future shares to investors. In other words, the investment will convert into equity in the future. This is what is known as a SAFE Note, which stands for a Simple Agreement for Future Equity.
This is good news for your startup because it means that no specific share price needs to be determined at the time of the raise. This makes things simple and flexible for both the investor and your startup.
What Is The Benefit Of Having A SAFE Note?
In Australia, SAFE Notes are popular with startups because it secures future equity for investors, so that you can get funding in the early stages.
Usually, the investor will receive their right to convert it into equity when a certain event ‘triggers’ it. The shares they receive will depend on the amount they paid upfront as well as the share price of the priced equity round.
Generally speaking, the main benefits of having a SAFE Note are as follows:
- It’s simple – the terms are relatively short and easy to understand
- There’s less to negotiate, so less risk of a headache!
- It’s flexible since there’s no need for valuation
So, Why Do I Need A SAFE Cap Table?
While having a SAFE Note is great news for your startup’s financial growth, it can also have quite an impact on your business. For example, you’d have to be aware of how it affects the ownership interests in your company.
This is where a SAFE Cap Table is useful.
A SAFE Cap Table can provide you with a better understanding of how a SAFE Note may affect:
- Ownership interests in your company
- Different investment scenarios
- Valuation of your company
Where Can I Get A SAFE Cap Table?
There’s no need to go running around stressing about how you can get this sorted out. Sprintlaw offers a SAFE Cap Table package so you can have useful insights into how your ownership interests will be affected by having a SAFE Note in place.
As part of our package, our lawyers will prepare a spreadsheet showing the mechanics of the SAFE contract and its potential impact on your company’s capitalisation table.
This will need to be tailored to your startups’ requirements and specific interests, so it’s a good idea to reach out and chat with our lawyers to get started.
Where Do I Start?
If you’re looking for a SAFE Cap Table for your startup, you’ve come to the right place. Our Australian lawyers will chat and work with you to draft a SAFE Cap Table tailored to your business.
If you would like a consultation on your options for your startup going forward, you can reach us at 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat. We have lawyers based in Australia and the UK who are more than happy to help you out.
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