Learn how to add a SAFE investment
SAFE (Simple Agreement for Future Equity) is a type of financial contract that allows investors to convert their investment into equity at a future priced funding round or liquidation event. Comparing to convertible notes, SAFEs are intended to provide a simpler mechanism for early stage companies to seek initial funding.
To add investments to a portfolio company, you must be a VC admin or a VC member who has access to the fund to which your company is assigned.
Add a SAFE investment
- Navigate to the top bar and select APP -> then go to the left side menu and click the Investments page.
- Hit the button Add Transaction at the top right of the screen or click the plus icon next to a company you want to add an investment to > click SAFE investment.
- At the next steps, Rundit will ask you relevant questions regarding your investment. You’ll have to enter the date of the transaction, investment amount and valuation cap.
- Valuation cap is used as company valuation and the potential ownership is calculated based on the SAFE amount and valuation cap.
- When adding multiple SAFEs, the newer valuation cap will be used as company valuation and therefore the fair value of the first safe will change accordingly.
- You’re able to add a discount rate and whether the SAFE is a Pre-Money SAFE (SAFE will be converted prior to the funding round) or Post-Money SAFE (SAFE will be converted as part of the funding round). Please note that Rundit calculations are the same for both types and discount rate doesn’t affect any figure.
- Hit the “Convert” button on the transaction row. SAFEs within a company are to be converted at the same time (in case if you have multiple ones). Follow the steps to fill in information on each note’s conversion (e.g. SAFE conversion 1, SAFE conversion 2).
- When information on each SAFE conversion has been filled, you will be asked to complete a valuation/ ownership update.