www.rubbish.love

elenaguberman·Jan 16, 2020

Hi ladies - my company just started fundraising actively and our first investor, who's been a supporter for a year and half, is super excited. We want to go with SAFEs but he is not comfortable with them. He's never done them before. He's open to anything else and still wants to invest - even said he'll take a personal guarantee. Any advice?

femmecheng·Jan 27, 2020

Do you have a lawyer? This is a great time for them to get involved. Doing this deal wrong can totally mess you up down the line with future investors. I just took a course on Cap Tables this weekend (am by no means an expert), but do consider what this will mean for your cap table and future investors.

elenaguberman·Jan 27, 2020

We do but SAFE's are meant to curb lawyers fees for early on in the game. Open to good lawyers though if you have one :-)

femmecheng·Jan 27, 2020

I totally understand-- I'm talking about getting help convincing the investor to do a SAFE. :-) The main takeaway I got from this seminar was to make sure you don't agree to things that might make future investors worry about your competence, etc. I have no idea what a personal guarantee means, but you want things to be very clear and manageable and documented for the future. (Apologies if you already know this/disagree/or otherwise have a plan. Just trying to contribute what I learned.)I'm working with Robert Mazzola, and think he's super knowledgeable, upfront and honest about fees (often fixed rates), and comes recommended from the local Sacramento startup scene. You can find his website here: waterstoneedge.com (or email [email protected]).

Olive106·Aug 11, 2020

Our very first angel investor was the exact same way. We went the personal guarantee. I think Y-combinator has a format for this, I believe it's called handshake deal or something. But we basically just did straight equity in exchange for the investment. At some point, way further down the line, it might be a bit more difficult if the angel is not an accredited investor. I've met with dozens of VCs so far for our pre-seed round and no one is at all concerned with the way we structured the angel investment or the cap table. Update, found the Y-Combinator article: https://www.ycombinator.com/handshake/ I'm not recommending a specific way, just letting you know how we did it and the feedback we've received since.

elenaguberman·Aug 12, 2020

Thanks so much for sharing! We ended up closing on a SAFE after he spoke with some references who told him a little more about the structure. I believe we added a clause for "what if we get acquired before a priced round" which he wanted, and we felt fine to oblige!

Olive106·Aug 12, 2020

Glad it all worked out! I didn’t realize how old the post was when I initially replied but then left it in case anyone needs the same info in the future. 😃