At Dorm Room Fund, we invest with unsused SAFS without discount, but with an MFN clause. This means that if the SAFE is converted into equity, the founders end up having more of the company than if there was a cap or discount. If new investors buy shares for $1.00, it`s also the Dorm Room Fund. Crowdfunding usually refers to a method of financing that raises money by recouping relatively modest individual investments or contributions from a large number of people. In May 2016, the SEC adopted rules under the Jumpstart Our Business Startups Act (JOBS Act) allowing individual investors to participate in securities-based crowdfunding. It is important to understand the terms of each SAFE in which you invest through a crowdfunding offer. Here are five things to know about a safe offer. SAFE agreements have a lot to offer. SAFE agreements are a relatively new type of investment created by Y Combinator in 2013. As soon as someone decides to invest in the company during a "price cycle", my SAFE is converted into shares of the company.
The SAFE is a kind of warrant that gives investors the right to obtain shares of the company, usually preferred shares, if and if there is an upcoming valuation event (i.e. the next time the company increases, acquires "valued" equity or submits an IPO). SAFEs are instruments that operate in the same way as a warrant. . . .