Republic Note
profit-sharing token
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A Simple Agreement for Future Equity
A SAFE is an investment contract between investors and companies looking to raise capital. Individuals make investments in exchange for the chance to earn a return—in the form of equity in the company—if the company experiences another round of financing, conducts a token-generation event*, is acquired or has an IPO.
The SAFE was created by Y Combinator and can be customized infinitesimally. Generally, SAFEs are financial instrument widely used by angels and VCs investing in startups.
* Recently, companies in the blockchain space have started using SAFEs as a way to sell tokenized equity, you should read these SAFE specifically for the terms and conditions associated with conversion and the risks associated with holding shares on a blockchain.
Investors using the SAFE get a financial stake in the company, but are not immediately holders of stock. Investments are converted to equity if certain “trigger events” occur, such as the company’s future financing, acquisition, IPO or another event pre-determined by the SAFE.
Risk note: trigger events are not guaranteed. Investors should see them only as possibilities.
Your return depends on your investment amount, the company’s exit valuation (how much the company is worth if and when the trigger event happens), and the terms of the SAFE.
Risk note: If there is never an exit valuation you may never get a return on your investment.
Each company can customize its SAFE, including or excluding certain provisions. Most include a valuation cap and a discount, others simply specify the price at which shares can be acquired in the future. If the SAFE includes both a valuation cap and a discount, the provision more favorable to the investor applies if there is ever a trigger event.
The below are examples of terms found in a SAFE, you may see all or some of them.
Price per share
The price per share denotes the cost per share at the time the investment converts into equity shares or cash. This means that investors, when a trigger event occurs, receive equity shares or cash as if they had purchased shares at the time of the SAFE purchase at the specified price.
Valuation cap
The valuation cap specifies the maximum valuation at which the investment converts into equity shares or cash. This means that investors, when a trigger event occurs, receive equity shares or cash at the valuation cap price—no matter the valuation at which the company sells. Therefore, the higher the valuation of the company at the time of sale, the greater the investor’s return.
Discount
If a trigger event for the company occurs, the discount provision gives investors equity shares (or equal value in cash) at a reduced price relative to what others pay at IPO or for the company’s acquisition.
When can I expect a return?
Investors can earn a return, if a trigger event occurs at a certain price threshold. Although trigger events sometimes happen earlier, many don’t occur for 4-6 years after the initial investment, and some take even longer.
Risk note: Startup investing is risky, so there’s no guarantee of a return on this kind of investment.
Can I sell my SAFE?
In general, you can only sell a SAFE after one year from purchase date and only if you find a buyer, which might not be easy to do. Some SAFEs restrict liquidity further, check the terms and conditions.
Will my SAFE get converted in the startup’s next round?
In the event of a subsequent equity financing round, the company will generally convert the SAFE. Please consult the SAFE for further details.
Republic Core LLC (“Core”) provides technology and support services to OpenDeal Inc. and its affiliates (collectively, the “Republic Ecosystem”). The Republic Ecosystem allowed users of its services to acquire reward notes (each a “Reward Note”). Reward Notes do not entitle you to any asset, economic right, governance right, interest or other item that could lead you to expect to profit from the Reward Note. Core is also the issuer of the note token, a security (each a “Note Token”). Claiming any Note Tokens requires participating in and meeting all the requirements of a securities offering, and such an offering is not guaranteed, nor can your participation be assured.
Both Reward Note recipients and Note Token holders and as well as users of the site and services maintained by the Republic Ecosystem, regardless of and their activities on or relating to the Republic Ecosystem are subject to mandatory arbitration, are precluded to claim any class action procedure, and are subject to the applicable terms of service, in their entirety.
Republic Core LLC, with respect to a contemplated Regulation A offering, is conforming to the standards of testing the waters under Regulation A of the Securities Act of 1933, as amended (“the Act”). This process allows companies to determine whether there may be interest in a potential offering of its securities. Core is not under any obligation to make an offering under Regulation A or otherwise. Core may choose to make an offering to some, but not all, of the people who indicate an interest in investing, and that offering may or may not be made under Regulation A. For example, Core may determine to proceed with an offering under Rule 506(c) of Regulation D, in which case it will offer securities only to accredited investors as defined in Rule 501(a) of Regulation D of the Act.
If and when Republic Core conducts an offering under Regulation A of the Act, it will do so only once (i) it has filed an offering statement with the Securities and Exchange Commission (“SEC”), (ii) the SEC has qualified such offering statement and (iii) investors have subscribed to the offering in the manner provided for in the offering statement. The information in the offering statement will be more complete than any test-the-waters materials and could differ in important ways. You must read the offering circular contained within the offering statement filed with and qualified by the SEC. No money or other consideration is being solicited at this time and if tendered, will not be accepted. No offer to buy securities in a Regulation A offering can be accepted and no part of the purchase price can be received until an offering statement is qualified with the SEC. Any offer to buy securities may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. Any indication of interest in a Republic Core offering involves no obligation or commitment of any kind.
This site (the "Site") is owned and maintained by OpenDeal Inc., which is not a registered broker-dealer. OpenDeal Inc. does not give investment advice, endorsement, analysis or recommendations with respect to any securities. All securities listed here are being offered by, and all information included on this Site is the responsibility of, the applicable issuer of such securities. The intermediary facilitating the offering will be identified in such offering’s documentation.
All funding-portal activities are conducted by OpenDeal Portal LLC doing business as Republic, a funding portal which is registered with the US Securities and Exchange Commission (SEC) as a funding portal (Portal) and is a member of the Financial Industry Regulatory Authority (FINRA). OpenDeal Portal LLC is located at 335 Madison Avenue, Suite 7E, New York, NY 10017, please check out background on FINRA’s Funding Portal page.
All broker-dealer related securities activity is conducted by OpenDeal Broker LLC, an affiliate of OpenDeal Inc. and OpenDeal Portal LLC, and a registered broker-dealer, and member of FINRA | SiPC, located at 1345 Avenue of the Americas, 15th Floor, New York, NY 10105, please check our background on FINRA’s BrokerCheck.
Certain pages discussing the mechanics and providing educational materials regarding regulation crowdfunding offerings may refer to OpenDeal Broker LLC and OpenDeal Portal LLC collectively as “Republic”, solvely for explanatory purposes.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC make investment recommendations and no communication, through this Site or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. Investment opportunities posted on this Site are private placements of securities that are not publicly traded, involve a high degree of risk, may lose value, are subject to holding period requirements and are intended for investors who do not need a liquid investment. Past performance is not indicative of future results. Investors must be able to afford the loss of their entire investment. Only qualified investors, which may be restricted to only Accredited Investors or non-U.S. persons, may invest in offerings hosted by OpenDeal Broker.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC, nor any of their officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy or completeness of any information on this Site or the use of information on this site. Offers to sell securities can only be made through official offering documents that contain important information about the investment and the issuers, including risks. Investors should carefully read the offering documents. Investors should conduct their own due diligence and are encouraged to consult with their tax, legal and financial advisors.
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Investors should verify any issuer information they consider important before making an investment.
Investments in private companies are particularly risky and may result in total loss of invested capital. Past performance of a security or a company does not guarantee future results or returns. Only investors who understand the risks of early stage investment and who meet the Republic's investment criteria may invest.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC verify information provided by companies on this Site and makes no assurance as to the completeness or accuracy of any such information. Additional information about companies fundraising on the Site can be found by searching the EDGAR database, or the offering documentation located on the Site when the offering does not require an EDGAR filing.
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