The basics
What is a SAFE?
SAFE stands for Simple Agreement for Future Equity. It's the standard, widely used agreement created by Y Combinator for early-stage startups. TMB plans to use the standard YC post-money SAFE.
- You put money in now. You sign a SAFE and invest today.
- You get shares later. Your SAFE turns into shares when TMB raises a future priced round (a round where investors buy shares at a set price).
- It isn't a loan. There's no interest and no maturity date, and TMB doesn't pay you back on a schedule.
If TMB never raises a priced round, a SAFE may never turn into shares. If the company is sold first, the SAFE has its own rules for that case. If the company shuts down, you may get back little or nothing.
Key terms
Valuation cap and discount
Valuation cap
The cap is the highest company value your SAFE will convert at. If a later round values the company above the cap, you convert as if it were valued at the cap, so you get a lower price per share than the new investors.
If a later round prices the company at $10M, a $5M cap means your money converts at about half the price per share that round's investors pay. If the round prices at or below the cap, the cap doesn't help and you convert at the round's price.
Discount
A discount lets SAFE holders convert at a percentage off the next round's price per share.
A 20% discount means you'd pay 80% of the next round's price per share. When a SAFE has both a cap and a discount, you convert at whichever gives the lower price. This is a general illustration, not TMB's terms.
Examples are for illustration only. They show how the terms work and are not a forecast of any kind.
TMB's round
Proposed terms
- Instrument
- Post-money SAFE (YC standard)
- Raising
- $500K
- Valuation cap
- $5M post-money
- Discount
- To be discussed
Nothing here is final. Terms, amounts and eligibility are confirmed one-on-one and only in signed documents.
- 1
Apply
Tell us who you are and the range you're thinking about. No payment, no commitment.
- 2
Talk it through
We'll reach out for a private conversation and answer your questions.
- 3
Review the documents
If we both want to move ahead, you'll get the final SAFE to review with your own advisor before anything is signed.
Please read
Risks
- High risk. Investing in an early-stage company is high risk. Most young companies don't succeed.
- You can lose all of it. Only invest money you can afford to lose entirely.
- Hard to sell. A SAFE is illiquid. There's no market to sell it, and your money may be tied up for many years.
- Nothing is promised. There's no assured outcome, payout or timeline of any kind.
- Unaudited numbers. Any business figures TMB shares are company-reported and unaudited.
Takes about a minute. No payment, no commitment.