Corporate Lawyers

SAFE Note Investment: Key Protections & Risks What is a SAFE Note? A SAFE (Simple Agreement for Future Equity) provides rights to future equity in a startup without setting a current share price. Unlike convertible notes, SAFEs aren't debt - they're contractual rights to equity upon triggering events. Key Protections: Conversion rights - Automatic conversion to equity during qualified financing rounds Valuation cap - Sets maximum valuation for calculating your ownership Discount rate - Provides reduced price compared to new investors (typically 10-30%) Pro-rata rights (if included) - Allows participation in future rounds Dissolution rights - Return of investment if company dissolves before conversion Major Risks: No maturity date - Can remain unconverted indefinitely No interest - Return depends solely on equity appreciation Dilution - Ownership can be significantly reduced in subsequent rounds Limited rights - No voting rights, minimal information access, no board representation Uncertain conversion - May never convert if company doesn't raise qualified financing Tax complexity - Unclear IRS guidance on certain aspects of SAFE taxation Terms to Negotiate: Lower valuation cap and higher discount rate MFN (Most Favored Nation) provision Pro-rata rights Conversion triggers and scenarios Information/reporting rights Risk Summary: SAFEs offer minimal investor protections compared to priced rounds. Your investment could remain illiquid indefinitely with no guaranteed return. Without pro-rata rights, your ownership can be significantly diluted in future rounds.

Happy to discuss, but it looks like you might want to submit a formal request for bids.

Hello! Tha answer is yes. What you need to do is seek a late election using Form 2553. Your late S corp election must be filed within three years and 75 days after its proposed effective date. This means that you can do this retroactively. You can even start here with this video to figure out how - https://www.youtube.com/watch?v=xA81sVVtgp8 Best of luck!

That's something that would be negotiated between the parties involved in the joint venture.

Hello! I'm so sorry you're having to deal with that. To start, you'll need to formally decide to dissolve the company. This usually involves a resolution by the board of directors and a vote by the shareholders, with the required percentage of votes depending on your bylaws. You've got to then file final tax returns. It's also essential to properly notify your creditors that the corporation is dissolving. This usually involves sending written notice to all known creditors, providing them with instructions for filing claims against the corporation. The other step is to file the actual dissolution documents with the state. The state allows you to do this online. Dissolving a corporation can be really difficult so please consult with us for more! Best of luck! Dolan