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?
What is a Liquidity Event?
What is a Dissolution Event?
What is a Review Conversion
What is a Pro Rata Right?
What is a Most Favored Nations Clause?
What Is an Employee Share Option Plan (ESOP) or Unissued Option Pool?
Can the Cash SAFE be Assigned?
Program Amount
Conversion to a Fixed Percentage
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 Program SAFE?
What is an Optional Conversion?
What is a Dissolution Event?
What is a Liquidity Event?
What is a Review Conversion?
If none of the above events occur prior to the Anniversary Date which is typically 12 months from the execution date of the Program SAFE, SOSV will have the right to “Review” the Program SAFE and the start-up’s progress, and at that point can choose to either:
- convert all or any part of the Program SAFE investment to common stock based on a fixed percentage of the Company capitalisation (as defined in the SAFE); or
- allow the Program SAFE to remain unconverted and review the Program SAFE on a future date as determined by SOSV.
It is important to note that SOSV’s intention under the Review Conversion is not to seek repayment of the SOSV investment amount. SOSV invests in your Company at an early stage with the intention of building a long term supportive relationship to help you build and scale your Company. SOSV’s ultimate goal is to maintain equity in your Company as it grows and becomes more valuable, as opposed to simply getting a repayment on the SOSV investment.