What is a SAFE Investment? | Explaining a Simple Agreement For Future Equity

Рет қаралды 13,530

3 жыл бұрын

SAFE contracts are the fastest way for entrepreneurs to raise capital for their startup and an easy way for angel investors to invest in early stage companies without the worry of determining a company's valuation prematurely.
💰 Learn how to INVEST in startups, build wealth, and diversify your portfolio. Link below:
www.startupinvestoracademy.co...
🚀 Get $2,500 OFF Raising Capital on Wefunder: wefunder.com/faresksebati/dis...
BE MY FRIEND 😄
📸 Instagram: / faresksebati
💼 LinkedIn: / faresksebati
🐦 Twitter: / faresksebati
🍭 TikTok: / faresksebati
A Simple Agreement For Future Equity (SAFE) is a cash investment now in exchange for a contract that gives the investor the right to convert their investment into equity in the future.
SAFEs were made popular by the startup accelerator Y Combinator, and have since been adopted by numerous accelerators and have become the standard for online regulation crowdfunding raise for startups.
A SAFE is NOT a loan and it's also NOT equity (yet). A SAFE is worthless if the company fails or the trigger events never happen.
Why are SAFEs used?
A Simple Agreement For Future Equity addresses two problems:
1. What the valuation should be of an early stage startup.
2. Time & money required to create elaborate investment documents.
Subscribe and learn more about investing in startups and building companies!
🤵 PROFESSIONAL BIO 🚀
Fares Ksebati is the CEO of MySwimPro, a global technology and media company that creates fitness apps that help people improve their performance and health. Most recently, he was selected for the Forbes 30 Under 30 List for 2020 in Consumer Technology. Fares enjoys sharing his passion for entrepreneurship as a keynote speaker and startup mentor to founders around the world.
MySwimPro is a digital community with over one million members in 180+ countries. The app has received international accolades being named the Best App of the Year by Apple and featured in Sports Illustrated. The company has global partners and an international investor base that spans 36 countries.
Fares is also the Founder of World Swim Day, a global initiative that empowers people around the world to be more active through swimming and promote water safety. He competed on Wayne State University's Varsity swimming program and graduated summa cum laude from the Mike Ilitch School of Business. Fares continues to compete internationally and is a 3x U.S. Masters swimming individual national champion, certified USA Triathlon Coach and American Swim Coaches Association Fellow.
Before launching MySwimPro, Fares led digital marketing at multiple venture-backed technology startups developing brand strategy and sharable content. His analytic approach to driving growth and creative insight for engaging audiences and branding has been attributed to the success of numerous early-stage companies. Fares, a Syrian-American has been recognized by Arab America as one of 15 Arab Americans who stole the spotlight in 2017.
🚨🚨🚨Financial Disclaimer 🚨🚨🚨
Do your own research! Fares Ksebati is not a licensed financial advisor. This video, the topics discussed, and ideas presented are opinions and presented for entertainment purposes only. Remember, I'm an entrepreneur, not your business advisor or money manager. The information presented should not be construed as financial or legal advice. Always do your own due diligence in all your business decisions and investment opportunities!

Пікірлер: 46

@fksebati Жыл бұрын

💰Learn how to INVEST in startups, build wealth, and diversify your portfolio. Link below: www.startupinvestoracademy.com/?

@andraynapolez3593 9 ай бұрын

Subscribed. Probably the best, most efficient video on SAFE agreements. Well done and well explained.

@fksebati 9 ай бұрын

Thanks for watching! Appreciate it. Good luck out there :)

@monsierlemaire8282 8 күн бұрын

Very helpful! Thanks for making this video.

@ganapathivenkatagiriyappa3065 4 ай бұрын

super clear! great info! thanks

@realfrancoamerica 6 ай бұрын

This is great content, we are raising capital and this was very clarifying for our tech startup

@biggieshorty 6 ай бұрын

You get right to it!

@monsieurteddy7135 3 жыл бұрын

Super useful! This video actually explains how a SAFE works!

@andrewcartwright3777 3 жыл бұрын

W•H•A•T•S•A•P•P• +•1•8•1•5•2•4•2•5•0•8•7 l~n~v~e~s~tC•r•y•p•t•o B•T•CA•N•D•E•T•H...........

@owenmartin2014 2 жыл бұрын

Great video!! This was so helpful for me. Very to the point which is so much better than any written content I came across on this. Thanks!

@fksebati 2 жыл бұрын

Great! Glad you liked it! Thanks for watching!

@jrfowell8559 15 күн бұрын

Excellent video. Really helpful.

@halabesmar4652 3 жыл бұрын

A great video! You explained very well!

@andrewcartwright3777 3 жыл бұрын

W•H•A•T•S•A•P•P• +•1•8•1•5•2•4•2•5•0•8•7 l~n~v~e~s~tC•r•y•p•t•o B•T•CA•N•D•E•T•H...........

@denyshriaznov786 2 жыл бұрын

Useful video, thanks!

@fksebati 2 жыл бұрын

You bet! Thanks for watching :)

@SingwithCinderella 3 жыл бұрын

thank you for sharing your tips, as always!!

@andrewcartwright3777 3 жыл бұрын

W•H•A•T•S•A•P•P• +•1•8•1•5•2•4•2•5•0•8•7 l~n~v~e~s~tC•r•y•p•t•o B•T•CA•N•D•E•T•H...........

@mirandasmith8914 3 жыл бұрын

Very well done video.

@andrewcartwright3777 3 жыл бұрын

W•H•A•T•S•A•P•P• +•1•8•1•5•2•4•2•5•0•8•7 l~n~v~e~s~tC•r•y•p•t•o B•T•CA•N•D•E•T•H...........

@d4commerce 3 жыл бұрын

Trying to raise some cap based on SAFE , perfect timing on this one.. Appreciate it. Very crisp !

@fksebati 3 жыл бұрын

Great to hear! Good luck with the raise! 🚀

@andrewcartwright3777 3 жыл бұрын

W•H•A•T•S•A•P•P• +•1•8•1•5•2•4•2•5•0•8•7 l~n~v~e~s~tC•r•y•p•t•o B•T•CA•N•D•E•T•H...........

@josephhuang5677 Ай бұрын

Thanks-The video is super clear and very helpful. One quick question: Is the SAFE agreement subject to federal and state securities laws and regulations? Do I need to register the financing with the SEC and state regulators?

@fksebati Ай бұрын

Good question. You don't need to file anything, that's the benefit of a SAFE. You just use the contract to get the financing and you're off building your empire! You should for sure have legal look at/write the contract and confirm with you that all your ducks are in a row.

@zmakhshari Жыл бұрын

I'm wondering about how should the investor recognizes such investment on his books and what disclosers about the SAFE are required

@DRMEditor 2 жыл бұрын

Notes I can copy as I listen get the extra attention with a comment and like

@fksebati 2 жыл бұрын

Thanks for watching

@sarahp8231 2 жыл бұрын

If the start up do well, what can I expect if I invest 5500$ in a company with a 3.5 million validation cap?

@haithemkchaou1413 8 ай бұрын

Are you saying that the discount is applied on the valuation cap? Then why not set the valuation cap at 8 in the first place

@Soul4Sail1 2 жыл бұрын

Once you obtain equity by this means, then how does the ROI go, hypothetically? If the company goes public or remains private, then what could you expect on a return in either case, percentage wise? though I know that may vary by company, but what do you look out for? How do you find that information out by their listing? I followed through from a comment on you unbanked investment video. Many are asking questions on Republic, about their extension from their $15m eval cap to the current round at a $115M eval cap & many were concerned..though they explained in many comments, that they had others want to invest,after tax season & they are doing a rolling close. Can you speak more on this situation? &/or do a follow up to the unbanked investment video to address this & in general my ROI question on a SAFE going public or remaining private? ie; does this equity convert to stock in an IPO in the future for example & if private,then what?

@chrisswallow5792 2 жыл бұрын

Is it reasonable if the SAFE to raise ceiling changes after your investment? Say I provided 25k with the expectation that only 1M was going to be raised under safe and owner changes the number to 4M. The scenario isn't covered under a simple safe agreement and the safe didn't have an initial valuation. Is there a recourse for the early investor? I see the downside as it will only convert under a lot higher valuation. Can I ask for a valuation cap after the fact?

@fksebati 2 жыл бұрын

Good question! That's the goal of a Valuation Cap so that the amount raised doesn't impact your initial investment. The determining factor of future dilution lies mostly in the valuation cap. If you didn't have a Cap in the SAFE contract, you'll need a different contract/amend the original to include that.

@ajkauly3682 Жыл бұрын

Thanks for great teachings. Question So who/what controls right of investor to sell this contract or the business owner to buy it back? is that out of the scope of the SAFE contract? Can it be included, if so how and what are typical terms/provisions? thanks AJ in Michigan

@fksebati Жыл бұрын

Great question! Normally there is a "lead investor" assigned to be the point of contact for all SAFE holders in the round. This doesn't actually have to be the biggest investor, just someone that is assigned this position.

@ajkauly3682 Жыл бұрын

Yes but should the contract have that investor determine WHEN they wish to sell? @@fksebati

@alkodjdjd 2 жыл бұрын

One quick note: a convertible note is a debt paid not in cash but in shares

@fksebati 2 жыл бұрын

This depends on the terms of the convertible note. Normally this is a cash payment with accruing interest like a traditional loan from a bank.

@SimpleChidie123 Жыл бұрын

So how do I get my money back?

@panchowallace6401 2 жыл бұрын

So lets say i invest $1000 into a company with a $20mil valuation cap how much could i expect to make?

@fksebati 2 жыл бұрын

Good question! That mostly depends on two things: 1) the exit valuation (how much the company sells for in the future or what the public share price becomes) and 2) how much more funding (dilution) the company has in the future before exit. Let’s say there was no dilution and the company sold for $100M then you’d theoretically 5x your initial investment. With additional rounds that ROI could be much lower.

@RachelLiu-gk9ph 10 ай бұрын

To be fair much of what I see described as passive income really isn't passive. Many people call property investment is passive incom but they are so wrong. How can you define something "passive" when you have to follow the trend, the market all the time. Passive income does not mean either "doing nothing to have money" or "other stream of income besides your 9-5 jobs". To me it means that you have to do something important steps at firsts, like researching, building your assets, putting you money on it, then in will pay you a certain amount of money later without you doing anything. My favorites passive income is the money i gain from leasing and buyback investment which requires me to do nothing. I just need to relax and wait for the money to run into my account. you can search the term leasing and buyback investment with foundation capital to know more.