- What is a SAFE Note?A simple agreement for future equity (SAFE) is an equity financing instrument that was developed by Y Combinator in the United States in 2013. The SAFE instrument was designed to accelerate fundraising for startups by providing a standard, short document (usually five pages) to simplify negotiations.
- What is a convertible note?
Convertible notes are debt instruments (with an option to convert into shares). If the investor does not choose to convert their convertible notes into shares, then the company will be obliged to repay the face value of the convertible note to the investor. Convertible notes usually also require the company to pay the investor interest payments (commonly called “coupons”).
- What is the 2/20/12 rule?The 2/20/12 rule essentially provides that a company can raise money for business up to $2 million, from 20 people, in any rolling 12-month period without issuing a disclosure document. Any offer made under this exemption must be a personal offer made to the recipient, and cannot be advertised.