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Kagi has successfully raised $670K in a SAFE note investment round, marking our first external fundraise to date. This was made possible with the participation
by throwaway2037 3y ago
Kagi has successfully raised $670K in a SAFE note investment round, marking our first external fundraise to date. This was made possible with the participation of 42 accredited investors, most of whom are actual Kagi users.
That is a dense paragraph.
1) What is a "SAFE note"? Google tells me:
A "Simple Agreement for Future Equity" note is a way that startups can raise capital. The SAFE note is a legally binding agreement that allows an investor to buy a specific number of shares for an agreed-upon price at some point in the future, usually when the startup has a subsequent funding round.
2) What are "accredited investors"? Let's assume US.
SEC tells me: https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor https://www.sec.gov/education/capitalraising/building-blocks...
Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
Or:
Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year
- somewhat_drunk 3y agoSAFEs are common in equity crowdfunding. Raises on Republic are often SAFEs. I'm not a fan.
- jerrygenser 3y agoThey are also standard in early stage institutional equity funding.
- dotcoma 3y agoWhy are you not a fan of SAFEs ? Thanks.
- somewhat_drunk 3y agoTo be clear, I don't like them from the perspective of equity crowdfunding, which has an alarmingly high percentage of low-information, follow-the-crowd, "dumb money" retail investors. SAFEs muddy the waters. It's just another thing that already overwhelmed retail investors need to take into account when considering whether to invest. https://www.finra.org/investors/insights/safe-securities https://www.finra.org/investors/insights/safe-securities
- dotcoma 3y agoThanks. Agree, but are SAFEs any worse than a normal convertible?
- somewhat_drunk 3y agoAs long as there isn't a secondary market on which to trade, then no, they aren't any worse. And right now, there isn't a good secondary market in the USA.
- dotcoma 3y agoWould SAFEs be worse than normal convertibles if there were a good secondary market? Why?
- senko 3y agoFor context, you're reading this on Hacker News, a forum hosted by YC. What Google didn't tell you is that SAFEs were invented by YC ten years ago in order to provide better angel/seed investing framework than the then-current bespoke convertible notes. You can read all about it here: https://www.ycombinator.com/documents/ https://www.ycombinator.com/documents/ "Accredited investor" is basically someone who is supposed to be sophisticated enough that they won't first give you (a startup) some money, then later on say they didn't know that your startup was risky and sue you. Accepting investments only from accredited investors is a way to shield yourself from that scenario. Both terms are used fairly often on HN (and really throughout the startup communities anywhere).