Y Combinator Co-founder Paul Graham, ex-Wilson Sonsini and current lawyer for the combinationator Carolynn Levy, Commissioner Kara Stein, SEC Commissioner Michael Piwowar and the authors of a Dry Investor Bulletin on Crowdfunding agree on the facts and circumstances of SAFES: SAFES is not an obligation for companies to pay fixed sums to lenders or creditors; They`re not debts. Instead, SAFs are contractual derivatives of the company`s equity, similar to equity call options or stock guarantees. As a result, FASD should be accounted for as additional released capital under permanent equity. Section 385 (b) of the U.S. Tax Code contains the following factors that the U.S. Treasury should consider in deciding whether a financial instrument designated as debt should be re-started as equity. The launch of safe by Y Combinator is a great example of what Silicon Valley does best – innovation to make businesses cleaner, simpler, faster, more efficient and accessible to startup creators. Startup creators and their colleagues are very busy people, and their working time is most valuable for developing their technology, building their teams and caring for their clients – not for administrative burdens such as renegotiating convertible debt contracts with imminent maturities that settle on them. SAFE is a simple but brilliant innovation that protects startup creators from unnecessary administrative burdens and allows them to focus on the development of their business.
The definition of the “monetary value” of the FASB is as follows: “What is the fair value of the liquidity, shares or other instruments that a financial instrument requires the issuer to be under certain market conditions at the time of the count.” Such a SAFES monetary value cannot be determined on the billing date (conversion date) until a date to be determined in the future. Of course, not everyone is satisfied. In particular, FAS has increased the downside risk for seed investors. In addition to the obvious and known risk of a business failure, SAFE investors now face the unexpected risk that successful start-ups will source their own supplies and never make a cheap financing cycle (because they don`t need it) and are therefore never forced to convert SAFE funds into equity or repay the money paid out. This is a potential negative result that doesn`t happen most of the time, but occurs often enough to have become an injured spot with some seed internship investors.