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about this template

This agreement is one of three different convertible instruments on our templates page that are intended to be used when recording either a seed investment from a third party investor or a bridge financing from existing shareholders:

  • this SAFE is intended to be used when a company is raising seed capital from a third party investor in the form of a convertible instrument.  The terms of the SAFE are company friendly and are based on Y-Combinator’s template agreement of the same name
  • the convertible note (KISS terms) is also intended to be used when a company is raising seed capital from a third party investor in the form of a convertible instrument.  The terms of the convertible note are based on the “keep-it-simple-security” created by 500 Startups and include some of the more investor friendly provisions typically included in convertible notes for seed investments in the US and as adopted for other global markets
  • the convertible shareholder loan agreement is a simple company friendly agreement, intended to be used when an existing shareholder lends money to a company as a form of bridging finance until an expected future financing event takes place.

This agreement anticipates that the investment amount is drawn down in a lump sum on one date and is unsecured.  The amount of the investment is not a loan, has no set maturity or repayment date and does not accrue interest.  The investment amount remains outstanding until:

  • it is automatically converted to equity on the date of the next capital raise
  • it is repaid or converted (at the election of the investor) on the occurrence of a liquidity event

The taxation of agreements of this nature has not been widely discussed or tested in New Zealand and we are currently seeking comment from leading tax advisers.  In the interim we do recommend that the investor receive specialist tax advice before entering into this agreement (noting that any tax obligations will be on the account of the investor rather than the company).

Under New Zealand securities legislation, a company may not issue (or offer to issue) shares, options or other securities without providing detailed disclosure information to the new shareholders unless it is satisfied that an exclusion to the information disclosure requirements of the Financial Markets Conduct Act 2013 applies in relation to that offer or issue.  Please see our NZ securities law – tech company capital raising guide for an explanation of the relevant exclusions.

a note on this pre-money SAFE

This template is a ‘pre-money’ SAFE. We have published a primer on the difference between a pre-money SAFE and a newer ‘post-money’ SAFE that has been developed by Y-Combinator.

In essence, the newer ‘post-money’ SAFE has terms that we think are less favorable for founders, which is why we continue to make this template available.

using our templates

Use of a template by business users is free of charge and is subject to you agreeing to our template terms of use.