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Simple Agreement for Future Equity
I need a Simple Agreement for Future Equity for an early-stage startup investment, specifying a valuation cap and discount rate, with provisions for conversion into equity upon a qualified financing event, and compliance with Swiss legal standards.
What is a Simple Agreement for Future Equity?
A Simple Agreement for Future Equity (SAFE) lets startups raise money quickly by promising investors future shares instead of immediate equity. It's simpler than traditional convertible notes and doesn't accumulate interest or have a maturity date - making it particularly attractive for Swiss early-stage companies seeking flexible funding options.
Under Swiss law, SAFEs work differently than their US counterparts since they must comply with specific corporate regulations. The agreement typically converts to equity when the company raises a qualified financing round, sells, or goes public. This gives founders access to capital without complex negotiations over current company valuation, while investors get the potential upside of early involvement.
When should you use a Simple Agreement for Future Equity?
Use a Simple Agreement for Future Equity when your Swiss startup needs quick capital but can't agree on a current valuation with investors. It's ideal for pre-revenue companies, particularly in fast-moving sectors like tech or biotech, where traditional valuation methods don't capture future potential.
This funding tool works especially well during initial seed rounds or bridge financing situations. Many Swiss accelerators and angel investors prefer SAFEs because they streamline negotiations and cut legal costs. The agreement becomes particularly valuable when you need to close multiple small investments rapidly or when your company's growth trajectory makes immediate valuation challenging.
What are the different types of Simple Agreement for Future Equity?
- Standard SAFE with valuation cap: Sets a maximum price for converting the investment into equity, protecting early investors from dilution
- Discount-only SAFE: Offers a percentage discount on the share price during the next financing round
- MFN (Most Favored Nation) SAFE: Automatically gives investors the best terms offered to later SAFE holders
- Swiss-adapted Y Combinator SAFE: Modified version of the popular US template to comply with Swiss corporate law and local investment practices
- Post-money SAFE: Calculates ownership based on the company's post-money valuation, providing clearer expectations for both parties
Who should typically use a Simple Agreement for Future Equity?
- Startup Founders: Use Simple Agreements for Future Equity to raise capital without immediate dilution or complex valuation discussions
- Angel Investors: Provide early-stage funding while securing rights to future equity at potentially favorable terms
- Startup Lawyers: Draft and customize SAFEs to comply with Swiss corporate law and protect both parties' interests
- Business Accelerators: Often recommend and facilitate SAFE agreements as part of their startup funding programs
- Company Board Members: Must approve SAFE issuance and ensure alignment with corporate strategy
How do you write a Simple Agreement for Future Equity?
- Company Details: Gather current capitalization table, corporate registration details, and board approvals
- Investment Terms: Define the investment amount, valuation cap, and any discount rate
- Trigger Events: Specify which events will convert the SAFE into equity (funding rounds, exit, IPO)
- Investor Information: Collect full legal names, addresses, and Swiss regulatory compliance status
- Documentation: Our platform generates precise SAFE agreements aligned with Swiss law, ensuring all critical elements are included
- Internal Review: Have key stakeholders verify terms match investment discussions before finalizing
What should be included in a Simple Agreement for Future Equity?
- Investment Amount: Clearly state the purchase amount and payment terms in Swiss francs
- Conversion Mechanics: Detail how and when the investment converts to equity shares
- Valuation Terms: Specify any valuation cap or discount rate for future equity conversion
- Rights and Restrictions: Define voting rights, transfer limitations, and information access
- Termination Events: List circumstances triggering conversion or termination
- Governing Law: Explicitly state Swiss law jurisdiction and dispute resolution process
- Representations: Include company and investor warranties under Swiss corporate law
What's the difference between a Simple Agreement for Future Equity and a Simple Agreement for Future Tokens?
Simple Agreements for Future Equity (SAFEs) and Equity Agreements serve different purposes in Swiss startup funding. While both deal with company ownership, they operate quite differently in practice.
- Timing of Ownership: SAFEs promise future equity upon specific trigger events, while Equity Agreements transfer ownership immediately
- Valuation Requirements: SAFEs postpone valuation discussions until conversion, but Equity Agreements need an agreed company valuation upfront
- Legal Complexity: SAFEs typically use simpler documentation and fewer negotiation points, making them faster to execute
- Investor Rights: Equity Agreements grant immediate shareholder rights, while SAFE holders must wait until conversion to exercise any ownership privileges
- Corporate Governance: SAFEs don't require immediate board seats or voting rights changes, unlike most Equity Agreements under Swiss law
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