— Simple Agreement for Future Equity — as a replacement for Convertible Notes • Announced December 2013, created by YC partner Carolynn Levy, who also wrote the Series AA docs with Wilson Sonsini in 2008 • Designed to fix issues with convertible notes being debt, and regulations around debt, such as fixed term and market interest rates
financing in a short period • Relatively frothy environment — Demo Day, guaranteed matching funds, and other investor interest meant relatively little worry about closing a next financing in 3 - 6 months • Deals getting done on a handshake where the main question is amount of investment, not any other negotiation
let’s train ourselves to not say SAFE — since that refers to a very specific document created by Y Combinator — but instead talk about Convertible Equity • 500 Startups released KISS — Keep It Simple Security • Also recognized “complex conversion scenarios”, came up with standardized Convertible Debt and Convertible Equity documents (without interest or maturity) • NACO Common Docs working on Lean Equity Alternative Financing (LEAF) as a standard for Canada
are accepted into YC and other programs • Founder-led term sheets mean that founders ask a buddy for a template, and Word docs get passed around of some Canadianized SAFE • Investors aren’t used to seeing them yet, and there are basically no online education sources for Canada
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