What Is A SAFE Cap Table, And Why Do I Need It?

As a New Zealand startup, one of the primary considerations you’ll have during your business journey is, ‘How will I secure funding?’

There are several avenues to explore, but a key strategy is to attract investment. To finance your startup, you might offer future shares to investors. Essentially, their investment will later be converted into company equity. This is known as a SAFE Note, which stands for a Simple Agreement for Future Equity.

This is advantageous for your startup as it eliminates the need to set a specific share price at the time of investment, simplifying the process and providing flexibility for both the investor and your company.

What Are The Advantages Of A SAFE Note?

In New Zealand, SAFE Notes are becoming increasingly popular with startups as they offer a way to secure future equity for investors, facilitating funding in the crucial early stages.

Typically, the investor’s right to convert their investment into equity is triggered by a specific event. The number of shares they receive will be based on their initial investment and the share price during the subsequent equity round.

The main advantages of using a SAFE Note include:

• Simplicity – the terms are straightforward and easy to comprehend
• Minimal negotiation, reducing complexity and stress
• Flexibility due to the absence of a required valuation

Why Is A SAFE Cap Table Important?

While a SAFE Note can significantly aid your startup’s financial development, it’s important to understand its impact on your company’s ownership structure.

A SAFE Cap Table is an invaluable tool in this regard.

It helps you grasp how a SAFE Note might influence:

• The distribution of ownership interests in your company
• Various investment scenarios
• Your company’s valuation

How Can I Obtain A SAFE Cap Table?

There’s no need to worry about where to find this resource. Sprintlaw offers a SAFE Cap Table package, providing you with insights into how a SAFE Note could affect your ownership interests.

Our package includes a spreadsheet prepared by our lawyers that details the mechanics of the SAFE agreement and its potential impact on your company’s capital structure.

Since it needs to be customised to your startup’s specific needs, it’s wise to get in touch with our legal team to begin the process.

Where Do I Start?

If you’re in search of a SAFE Cap Table for your startup, look no further. Our team at Sprintlaw will collaborate with you to create a SAFE Cap Table that’s customised for your business.

For a consultation on your startup’s future options, contact us at 0800 002 184 or [email protected] for a free, no-obligation chat. Our lawyers, with expertise in New Zealand law, are eager to assist you.

---