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Hey folks, this is Evan from AI Grant! We're excited to support founders building new AI products. AI Grant is investing $250k on an uncapped, no-discount, MF

by flaque 4y ago

Hey folks, this is Evan from AI Grant! We're excited to support founders building new AI products. AI Grant is investing $250k on an uncapped, no-discount, MFN SAFE, as well as providing more than $300k in cloud credits. AI Grant used to do small grants in lots of AI research projects. Now, we think there's plenty of research, and what's needed is products: so we're doing bigger investments in founders building products. Name's the same, but now we can deploy larger checks, and focus on what we think will help the most in 2022. Frankly we used the name "AI Grant" because we already had it! If you're working on something cool, please apply! And if you have a special situation, or need help, reach out to support@aigrant.org

echelon 4y ago
How does the "uncapped, no-discount, MFN SAFE" work? What does that mean in terms of the percentage of equity you'd take? I'm self-funding fakeyou.com from a previous exit. My AI/ML startup is called "Storyteller" and my team is about to launch real time voice conversion (you -> Trump, Adele, etc.), music generation (instruments + vocals), and real time motion capture (for film and animation, essentially super high quality VTubers) in a matter of weeks, plus a bunch of other stuff by EOQ3. From there it's AI musicians, story generation, etc. A takeover and democratization of Hollywood and Nashville. I have no idea what I'm doing in terms of fundraising. We have 5M+ MAUs and I don't even have a deck. I'm in Atlanta grinding out product and I'm not plugged into this VC/fundraising world, but I know I need to grow this. The $300k cloud credits sounds right-sized. I also started buying a metric ton of 3090s and running k8s both in the cloud and on-prem. :)
- mrosett 4y ago
  Apologies if this comes off as harsh, but I'd recommend doing your own research on fundraising and common terms rather than trusting potential investors to educate you. To address your question, an "uncapped, no-discount, MFN SAFE" roughly amounts to getting the same terms that will be given to your next investors: https://www.dentonsventurebeyond.com/resource-center/safes/ https://www.dentonsventurebeyond.com/resource-center/safes/
- sebmellen 4y ago
  Very high level explanation of a SAFE is that it converts on the valuation of your next funding round. Uncapped means that if you raise at a $200m valuation in one year, the SAFE will convert to equity at 250k/200m or 0.125% of the company. More details here https://capbase.com/how-do-safes-work/ https://capbase.com/how-do-safes-work/.
  - vosper 4y ago
    > Uncapped means that if you raise at a $200m valuation in one year, the SAFE will convert to equity at 250k/200m or 0.125% of the company. How would it be different if it was capped? I went to your link but there are no mentioned of "capped" or "uncapped"
    - andrewljohnson 4y ago
      Cap sets a valuation cap, say $20M, and the safe converts to equity at the lesser of the cap and the valuation of the later round.
    - williamstein 4y ago
      If it is capped then you replace “200m” by the minimum of “200m” and some agreed on amount, e.g., 10m. This protects the investor in case the first equity round has a surprisingly high valuation, which would dramatically dilute them. At the same time, instead of agreeing on a valuation for the initial investment, you are agreeing on a theoretical upper bound on the current valuation.
    - bleuchase 4y ago
      Capped means the investor is putting in a floor for the minimum stake they’ll accept in the next round. So regardless of next funding round they would get own (original investment)/(new valuation with maximum value of cap) = % of company owned. Uncapped means the denominator will be whatever new valuation is.
    - HWR_14 4y ago
      How it matters to the founder - if it's uncapped then as the next round goes to infinity, the equity from the SAFE round goes to zero (see the 200MM example). If It's capped, then the SAFE will convert at no lower than X%. Uncapped is better for the founder, but the difference only will ever really matter if it takes off so fast that the next round is at a much higher valuation than expected.
- O__________O 4y ago
  Beyond your specific question, which appears to have been answered, highly recommend the book “Venture Deals” to learn more about equity based funding: https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119594820 https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...
- chrismorgan 4y ago
  > a metric ton of 3090s Hmm… their weights vary a bit more than I would have expected; in a little searching, I’m finding figures ranging from 1372g for a Gigabyte (which would be ~729 to the ton) to 2157g for the Founders Edition (which would be ~464 to the ton). (Aside: this is the first time I’ve reached for Google in well over a year, because DuckDuckGo categorically failed to find anything even vaguely useful or relevant for my queries, whereas Google found plenty of meaningful results.)
  - echelon 4y ago
    I really appreciate this comment.
simonebrunozzi 4y ago
> MFN SAFE I'd guess most people wouldn't know the meaning, so here it goes: MFN Clause: In a most favored nation (MFN) clause, if subsequent convertible securities are issued to future investors at better terms (e.g., a lower valuation cap), the better terms will automatically apply to the investor's SAFE.
deleted 4y ago
[deleted]

by flaque 4y ago

echelon 4y ago

How does the "uncapped, no-discount, MFN SAFE" work? What does that mean in terms of the percentage of equity you'd take? I'm self-funding fakeyou.com from a previous exit. My AI/ML startup is called "Storyteller" and my team is about to launch real time voice conversion (you -> Trump, Adele, etc.), music generation (instruments + vocals), and real time motion capture (for film and animation, essentially super high quality VTubers) in a matter of weeks, plus a bunch of other stuff by EOQ3. From there it's AI musicians, story generation, etc. A takeover and democratization of Hollywood and Nashville. I have no idea what I'm doing in terms of fundraising. We have 5M+ MAUs and I don't even have a deck. I'm in Atlanta grinding out product and I'm not plugged into this VC/fundraising world, but I know I need to grow this. The $300k cloud credits sounds right-sized. I also started buying a metric ton of 3090s and running k8s both in the cloud and on-prem. :)

mrosett 4y ago
Apologies if this comes off as harsh, but I'd recommend doing your own research on fundraising and common terms rather than trusting potential investors to educate you. To address your question, an "uncapped, no-discount, MFN SAFE" roughly amounts to getting the same terms that will be given to your next investors: https://www.dentonsventurebeyond.com/resource-center/safes/ https://www.dentonsventurebeyond.com/resource-center/safes/
sebmellen 4y ago
Very high level explanation of a SAFE is that it converts on the valuation of your next funding round. Uncapped means that if you raise at a $200m valuation in one year, the SAFE will convert to equity at 250k/200m or 0.125% of the company. More details here https://capbase.com/how-do-safes-work/ https://capbase.com/how-do-safes-work/.
- vosper 4y ago
  > Uncapped means that if you raise at a $200m valuation in one year, the SAFE will convert to equity at 250k/200m or 0.125% of the company. How would it be different if it was capped? I went to your link but there are no mentioned of "capped" or "uncapped"
  - andrewljohnson 4y ago
    Cap sets a valuation cap, say $20M, and the safe converts to equity at the lesser of the cap and the valuation of the later round.
  - williamstein 4y ago
    If it is capped then you replace “200m” by the minimum of “200m” and some agreed on amount, e.g., 10m. This protects the investor in case the first equity round has a surprisingly high valuation, which would dramatically dilute them. At the same time, instead of agreeing on a valuation for the initial investment, you are agreeing on a theoretical upper bound on the current valuation.
  - bleuchase 4y ago
    Capped means the investor is putting in a floor for the minimum stake they’ll accept in the next round. So regardless of next funding round they would get own (original investment)/(new valuation with maximum value of cap) = % of company owned. Uncapped means the denominator will be whatever new valuation is.
  - HWR_14 4y ago
    How it matters to the founder - if it's uncapped then as the next round goes to infinity, the equity from the SAFE round goes to zero (see the 200MM example). If It's capped, then the SAFE will convert at no lower than X%. Uncapped is better for the founder, but the difference only will ever really matter if it takes off so fast that the next round is at a much higher valuation than expected.
O__________O 4y ago
Beyond your specific question, which appears to have been answered, highly recommend the book “Venture Deals” to learn more about equity based funding: https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1119594820 https://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitali...
chrismorgan 4y ago
> a metric ton of 3090s Hmm… their weights vary a bit more than I would have expected; in a little searching, I’m finding figures ranging from 1372g for a Gigabyte (which would be ~729 to the ton) to 2157g for the Founders Edition (which would be ~464 to the ton). (Aside: this is the first time I’ve reached for Google in well over a year, because DuckDuckGo categorically failed to find anything even vaguely useful or relevant for my queries, whereas Google found plenty of meaningful results.)
- echelon 4y ago
  I really appreciate this comment.

simonebrunozzi 4y ago

> MFN SAFE I'd guess most people wouldn't know the meaning, so here it goes: MFN Clause: In a most favored nation (MFN) clause, if subsequent convertible securities are issued to future investors at better terms (e.g., a lower valuation cap), the better terms will automatically apply to the investor's SAFE.

deleted 4y ago

[deleted]