Vc Safe Agreement

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Vc Safe Agreement

Our first vault was a „pre-money“ vault, because at the time of its launch, startups raised small amounts of money before launching a cheap funding round (typically a round of Serie A preferred shares). The safe was an easy and quick way to get the first money in the business, and the concept was that safe owners were just early investors in this future price cycle. But fundraising at the beginning developed in the years following the launch of the original vault, and now startups are raising much larger sums of money than the first round of „Seed“ funding. While safes are used for these seed towers, these cycles are really better regarded as totally separate financing rather than „bridges“ in subsequent price cycles. While the vault may not be suitable for all funding situations, the conditions must be balanced, taking into account both the interests of the startup and investors. As with the original vault, there are still trade-offs between simplicity and completeness, so not all marginal cases are addressed, but we think the vault covers the most relevant and common issues. Both parties are encouraged to have their lawyers check the vault if they wish, but we believe it offers a starting point that can be used in most situations without change. We stick to this belief because we have seen hundreds of companies first-hand every year and helped them raise funds, as well as based on the thoughtful feedback we received from founders, investors, lawyers and accountants with whom we shared the first designs of the post-money vault. Another innovation of the safe concerns a „proportional“ right. The initial vault required the company to allow safe holders to participate in the funding cycle after the funding cycle into which the vault was transformed (for example. B if the safe were converted into Series A preferred share financing, a safe holder – now holding a sub-series of Series A Preferred Shares – would be allowed to acquire a proportionate share of the Series B Preferred Shares). While this concept fits the original vault concept, it made less sense in a world where vaults have become independent funding cycles.

Thus, the „old“ proportional right is removed from the new safe, but we have a new (optional) letter that offers the investor a proportional right in the financing of the Series A Preferred Stock, based on the investor`s as-converted secure ownership, which is now much more transparent. Whether or not a startup and an investor take the secondary letter with a safe, it will now be a decision that will be made by the parties and it can depend on a large number of factors. . . .

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