Matias Vukusic [00:07:38] There are different types of secure agreements of the Y combiner with which the settlement began. They designed them and they published it in 2013, and they had different types of statements that basically talked about the difference in what free money was, saving them postal seats. I don`t want to get into the technique, but it`s basically about how to make the top table of the startup. The light of investing both ways of money is a little clearer, because the only ones that are watered down are the founders of the company, like the founders of the company`s employees and investors and all those who have security and other states like the first states and all the research that would come before they are not diluted. It is therefore essentially the post-monetary valuation ceiling. With this vault, it`s only much more investor-friendly, but they make founders become much more watered down than they are before money. That`s great. As the first thing that is important to me is like telling founders when they get the wrong money that they are diluted more than they could by using other investment documents and those like convertible bonds or like simple security or even a pre-money seat. which they are not. This is not the case.
This is not the case. What are you saying? It is that they have no kind of official meaning for the Y combiner. There are no officials, but at the moment the elders are official, the post office saves money but saves pre-money. It still exists. And you can even find them on Law Insider, so the overall valuation, the valuation cap is something that both the startup and the investor trade with. It is essentially at the valuation ceiling that the State converts. Right? So, if the price round or any other triggering event that converts the money they gave you into shares is above the valuation cap. The state converts to value, but if the startup`s valuation is a lower upper limit than the vault`s compared to the actual valuation.
Thus, in the end, investors own more of the company than their investment, allows them, entitles them to a higher stake. And post-monetary valuation simply means that the sum of the company`s pre-monetary valuation has already been valued before a price race has been raised and new money, including the asset, has been absorbed. Right. So, this is essentially the case that the valuation cap is really important. It`s just something that the startup and investors have to negotiate because it`s a number that will essentially define how much, how much, how much, how diluted it will be, the founders said. How we are going to get the founders of the company. In 2018, Y Combinator modified the SAFE contract template to allow the company to change it without the consent of certain investors. The company needs to get approval from investors, but it doesn`t need to get their signatures at all. An acquisition schedule for consultants, just like you have it for yourself and your employees, is crucial.
These agreements often have a two-year schedule that is transmitted monthly and without a cliff. The investor and the company negotiate these terms and incorporate them into the SAFE agreement. The « when » is usually triggered by an event such as a formal valuation of the business or when the company raises funds through a Series A funding round. One of the dangers for international lawyers is that if they are looking for SAFE agreements to use in drafting, they can find scammers. There are contracts called SAFE that are not identical to the Y Combinator SAFE agreement. These other agreements are thus only titled by the creator of the contract for marketing purposes. Fortunately, there are several well-written SAFE documents in the spirit of the original SAFE agreement. Some deals have a three-month cliff, which gives the parties time to determine if the relationship adds value and works. The two terms you`ll hear most often in SAFE agreements and most seed funding agreements are pre-money valuation and post-money valuation. Pre-money is the valuation of the business before investments take place.
Valuation by money often refers to the value of the business after an investment cycle has taken place, para. B example the sale of a series A share round. 11. Diverse. Any provision of this Agreement may only be modified or repealed with the written consent of the parties. As long as you continue to act as an advisor to the Company, you hereby agree that the Company may include your name in its marketing materials, website or private placement note, or offer materials as an advisor to the Company. This Agreement, including all Annexes, constitutes the sole agreement of the Parties and supersedes all prior oral proceedings and writings relating to the subject matter of this Agreement. The validity, interpretation, interpretation, and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of California, without principles of conflict of laws. This Agreement may be implemented in counterparties, each of which shall be considered original, but which together constitute a single instrument. Clayton Bryan is a venture capital partner in 500 startups.
He advises start-ups to look not only for someone who can provide temporary advice, but also someone who can « teach and maybe nurture someone who is younger. So, they can speed up that learning curve, and then the company can start running in a much faster clip. « Matias Vukusic [00:02:19] This is in its essence, the sure path to future fairness. That pretty much sums up what the document is. This is an agreement between a start-up and an investor in which the investor is promised that he will convert the money given to the startup into shares or shares of such a company at a later date. When the startup raises funds for a price round. So, it`s basically for startups in the start-up phase. Matias Vukusic [00:21:28] Yes. Yes. I mean, uh. OK, so there`s this narrative trick, as if the founders shouldn`t take the time to review the terms of the agreement they sign.
Is that all everyone and others sign and say yes to every term sheet offered by the investor? They can be terminated or any transaction that invests offers. And it`s actually here in Latin America. This is actually the case when the investor is usually much more powerful than the startup and the United States. They were like philanthropists. You give money to the children, don`t you? It`s actually something like the whole atmosphere of the process, isn`t it? And that`s a common attitude. And this is reflected in some ways in this version of the Y Combinator Safe, which dates back to 2018 with the current version of Y Combinator Y Combinator, say, for example, that the Company`s common shares monitor all dilutions of all substitutes, from any safes or convertible bonds subsequent to a round of shares up to the price range. Certainly, the holders are not diluted at all. It wasn`t the industry that started, not even here in Latin America. Investors have a lot of power.
Some have a lot of power in startups. And it`s kind of crazy. I mean, they did it for the sake of clarity of the cap chart, but it`s kind of crazy. And I don`t want to get into the whole dilution argument, which is very technical. Another purpose of this confrontation, but it is only a warning to the founders. I mean, the Y Combinator and other versions that are publicly distributed in English and Spanish or any other language should be reviewed by a lawyer before signing. Or you probably can`t get a good deal. But the fact is, unfortunately, it takes time to get a good deal, and that`s something in this industry that it`s not good for. It`s like waiting for lawyers to have a processing time for lawyers that isn`t as fast as they`d like. And it`s basically something that obviously increases the prices that have to be paid.. .