This is the coolest financial instrument I've seen in a long time, ok ever.
It makes me wonder if there is a way to craft something so that a WeFunder or some other crowd sourced funding group could build one with multiple people participating that would have a slightly higher liquidation cash preference and no stock.
Basically it would work like this:
A group of people pool funds to fund a SAFE note with a 2x cash liquidation preference. So the next time the company raises money, they set aside 2x (or 1.5x or what ever the note says) in equivalent cash to return to the SAFE investors.
The SAFE contributors get a simple return (liquidation preference / time before liquidated), the startup gets lift off and a simple cap table (the SAFE vanishes after liquidation). It puts a cap on the return the SAFE investor gets in exchange for a somewhat lower risk (the company gets to its series A).
It makes me wonder if there is a way to craft something so that a WeFunder or some other crowd sourced funding group could build one with multiple people participating that would have a slightly higher liquidation cash preference and no stock.
Basically it would work like this:
A group of people pool funds to fund a SAFE note with a 2x cash liquidation preference. So the next time the company raises money, they set aside 2x (or 1.5x or what ever the note says) in equivalent cash to return to the SAFE investors.
The SAFE contributors get a simple return (liquidation preference / time before liquidated), the startup gets lift off and a simple cap table (the SAFE vanishes after liquidation). It puts a cap on the return the SAFE investor gets in exchange for a somewhat lower risk (the company gets to its series A).