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SAFE: A better replacement for convertible notes - Brendan Ciecko - Innovation Nest Mentors

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Simple Agreement for Future Equity which is a better replacement for convertible notes.

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SAFE: A better replacement for convertible notes - Brendan Ciecko - Innovation Nest Mentors

  1. 1. Fundraising: SAFE by Brendan Ciecko @brendanciecko
  2. 2. Innovation Nest – Poland most active seed fund invites hand selected companies to a series of closed events. This one is about money. WHAT IS THIS?
  3. 3. WHO IS BRENDAN? Brendan Ciecko is the Founder & CEO of Spotzer, a start-up with the vision to transform the way people engage with art and culture at museums and beyond. getspotzer.com @brendanciecko
  4. 4. So what is SAFE anyway?
  5. 5. SAFE Simple Agreement for Future Equity A better replacement for  convertible notes. What’s SAFE anyway?
  6. 6. introduced by Y Combinator in 2013 fast to execute keeps down legal costs intended to replace convertible notes SAFE in a nutshell:
  7. 7. short & easy to understand not debt, not a loan conversion to equity at priced round no risk of insolvency and a little bit more:
  8. 8. It requires only 5 pages therefore is short and easy to understand It keeps things simple z z z z z z z z z z z z z z z z z
  9. 9. What is so innovative about SAFE?
  10. 10. SAFE CONVERTIBLE NOTE FAST & SIMPLE CONVERSION TO EQUITY CORPS ONLY INTEREST RATE MATURITY DATE CORPS & LLC DISCOUNT CAP MFN EARLY EXIT Let’s compare: SAFE
  11. 11. Reactions to SAFE
  12. 12. I’ve never seen this before I’m trying to figure out if your investment structure allows me to get a certain tax treatment. The SAFE structure is a bit atypical, although more the norm now. ” ” Reactions to SAFE are mixed…
  13. 13. …even (especially?) within investors…
  14. 14. Oh, you’re using SAFE… Awesome! …but finally! ”
  15. 15. My tips before you start looking for an investor
  16. 16. FIND MENTORS & ADVISORS They provide advice, introductions, investment, and social proof. They care about your business as much as you do and will be able to provide you with valuable connections and advice. #1
  17. 17. Fundraising is extremely time consuming for CEO. It’s crucial to plan the whole process as you’ll find yourself fundraising for next couple of months. #2 START THE PROCESS EARLY
  18. 18. Prepare different set of pitches that you can use in certain situations, eg: ITERATE YOUR PITCH 20 second pitch
 Just enough information to grab attention 1 minute pitch Give something to attract and explain briefly the idea 5 minutes pitch Provide more details but do not bore the audience #3
  19. 19. FIND A LAWYER THAT SPECIALIZE IN START-UP LAW You don’t have to know all legal nuances. It’s always better to be safe than sorry. #4
  20. 20. RELATE When contacting an investor try to find things that you two have in common. It shortens the distance and builds a nice foundation for longer relationship. #5
  21. 21. WARM VS COLD INTRODUCTIONS Being referred to an investor by CEO of one of their portfolio companies will work much better than sending cold emails. #6
  22. 22. BE PERSISTENT Fundraising requires persistence. Do not give up. Keep following up until you receive the final answer. #7
  23. 23. And lastly: not all advice is a good advice.
  24. 24. This presentation is brought to you by Innovation Nest
 Learn more about us at innovationnest.co

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