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Incorporation

Key Considerations When Deciding Where To Incorporate

How To Incorporate a Delaware C Corp Through Clerky?

Form Of SOSV Program Investments

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

Structure of the SOSV Program Investment

Cash SAFE

Program SAFE

Additional Cash SAFE

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 SAFE

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?

What is a Pro Rata Right?

As the Company continues to grow and raise additional financing, the ownership percentage of all of the existing shareholders (Founders and investors) will be diluted. The aim of the pro rata right is to allow the existing shareholders (usually investors, like SOSV), at their discretion, to purchase additional shares or convertible instruments at the market rate at that time to maintain their percentage ownership.

Under the terms of the pro rata right as detailed in the Program SAFE (either a direct right attaching to the equity into which the Program SAFE converts, a right to participate in a convertible instrument round before the Program SAFE converts, or by a separate “Pro Rata Rights Agreement”), SOSV is entitled to acquire further equity in future financing rounds, based on the price and terms of such financing rounds, generally to maintain SOSV’s pro rata (pre-financing) equity percentage in your Company.

SOSV’s pro rata right right demonstrates both SOSV’s interest in maintaining its percentage ownership in your Company over time – from the very early stages right through to a potential sale – as well as SOSV’s intention to develop an ongoing, open, and productive relationship with your Company. SOSV has a history of maintaining its pro rata share (if not more!) in SOSV portfolio companies. Follow-on investors generally look favorably on committed existing investors, rather than investors who might be “one round and done”.

What is an Employee Share Option Plan (ESOP) or Unissued Option Pool?

What Representations and Warranties are Given with Respect to the Company’s Intellectual Property?

What are SOSV’s Vesting Requirements?

What is a Most Favored Nations Clause?

What is a Put Right?

What is an Observer Right?

What are Information Rights?

What is the Major Investor Designation Clause?

What is a Pre Conversion Pro Rata Right?

What is a First Financing Right?

What is the Investor Consent Matters Clause?

What are the Program Participation Requirements?

What Happens if a Participant is Removed From the Program?

What Does the Exit Endeavour Clause Mean?

Can the Program SAFE be Assigned?

Optional Additional Cash SAFE

What is an Additional Cash SAFE?