Document background
The Agreement for Future Equity (SAFE) has become increasingly popular in New Zealand's startup ecosystem as a streamlined alternative to convertible notes. This document is typically used when a company seeks early-stage funding but wants to defer the complexity of establishing a company valuation and implementing immediate equity arrangements. The SAFE agreement, while maintaining compliance with New Zealand corporate and securities laws, provides a mechanism for investment to convert into equity at a later date, usually during a priced equity funding round. It includes essential terms such as valuation caps, discount rates, and conversion mechanisms, while incorporating specific provisions required under New Zealand law. This instrument is particularly suitable for high-growth startups seeking quick access to capital without the immediate complexity of share issuance or the burden of debt.
