Starting January 1, 2024, virtually all private companies will be required to report information about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network “FinCEN”) under the Corporate...more
Startups have been raising money using the Simple Agreement for Future Equity (SAFE) since it was first introduced by Y Combinator in 2013. The advent of the SAFE has fundamentally changed the speed and simplicity of...more
One common problem of early-stage ventures is the difficulty in determining a company valuation when recruiting capital from investors. This problem derives from the tension between entrepreneurs’ desire for a high valuation...more
Benjamin Franklin famously cautioned that “an ounce of prevention is worth a pound of cure.” Although Franklin was warning the people of Philadelphia that preventing a fire is better than fighting one, the same admonition...more
The convertible debt market has remained remarkably stable over the last 15 months, despite considerable economic uncertainty related to the COVID-19 pandemic. Fenwick’s latest Convertible Debt Terms – Survey of Market Trends...more
Congratulations! Your startup has developed a viable product that you are ready to test in the market. But you need some early money to fund this critical phase! Convertible debt can allow a startup to raise money with more...more
Letter from the Editors - Words are very powerful and the language we use often frames a discussion. For example, the term “shareholder activist” sounds like a consumer friendly person who has everyone’s best interests at...more
Historically, most startup companies were funded either by the offering of equity or by loans in the form of convertible promissory notes. Recently, however, there have been some hybrid instruments created to fund startups....more
Seniority Matters - There is little doubt that activity in the trading of secondary shares of private companies remains robust. Private companies are staying private longer and there seems to be an unlimited demand to buy...more
Entrepreneurs often raise capital with a combination of convertible notes and an agreement called a SAFE, or Simple Agreement for Future Equity. A SAFE seems like a no-nonsense DIY solution for early-stage companies—but...more
After years of increasing acceptance of and reliance on convertible note financings as a mechanism for funding early-stage companies, we have noted a clear emerging trend away from such transactions (and others like them,...more
With the increasing level of investment in emerging companies, entrepreneurs are being presented with a wider range of financing documents. One of the relatively newer financing instruments is the “SAFE” (simple agreement for...more
Overview - In late 2013, startup accelerator Y Combinator unveiled its Simple Agreement for Future Equity (“SAFE”) investment instrument as an alternative to convertible debt. While SAFE templates appeared in...more