Legal FAQs
Key Considerations When Deciding Where To Incorporate
How To Incorporate a Delaware C Corp Through Clerky?
How are SOSV Program Investments Made?
What Is A SAFE?
What Does Post-Money Mean?
How Does a Post-Money Fixed Percentage SAFE Convert to Equity?
Structure of the SOSV Program Investment
Cash SAFE
Program SAFE
Additional Cash SAFE
Cash Amount
Conversion – Valuation Cap Or Discount?
What Events Trigger Conversion of Investment to Equity?
What is an Equity Financing?
What Calculation is Used to Determine the Number of Shares Issuable to the Investor Upon Conversion of the Cash SAFE?
What is an Optional Conversion?
From the Equity Financing section above you will see that the SAFE automatically converts to equity when the Company secures an Equity Financing at the Equity Financing Threshold. The definition of Equity Financing also provides for an optional conversion mechanism which means that SOSV can, at its discretion, convert the SAFE to equity on the basis of either the Valuation Cap or the Discount (depending on which will provide the greatest number of shares) if the Company raises an equity financing round that is less than the required Equity Financing Threshold.
Why? Well, for example if you raised just below the Equity Financing Threshold instead of an amount at or above the Equity Financing Threshold, then SOSV may consider converting at that point rather than wait for another future round at or above the Equity Financing Threshold.