Simple Agreement For Future Equity Sec

At the end of 2013, Y Combinator published the Investment Instrument Simple Agreement for Future Equity (SAFE) as an alternative to convertible bonds. [2] Since then, this investment vehicle has become popular in both the United States and Canada,[3] due to its simplicity and low transaction costs. However, as use has become increasingly frequent, concerns have been raised about the potential impact on entrepreneurs, particularly when multiple SAFE investment cycles are completed prior to an assessed capital cycle[4], as well as the potential risks for non-accredited crowdfunding investors who could invest in equity of companies that, realistically, will never receive venture capital funding and therefore never trigger a conversion into equity. .

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