Safer resources
The instrument download, interactive investor and founder modelers, the accounting memo and plain-language guides in one place.
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The Safer
Let revenue buy back the round
The Simple Agreement for Future Equity with Repurchase gives investors a path to returns as a company earns and gives founders a way to reclaim ownership as they grow. The contract is open source.
Lifecycle
Four stages from signing to settlement
- 1
Investment
The investor provides the purchase amount and both sides sign the negotiated terms.
- 2
Development
During the honeymoon period the company builds with no repurchase payments due.
- 3
Revenue
Quarterly repurchase payments run until cumulative payments reach the target return.
- 4
Termination
The agreement ends when the investor is paid through a liquidity or dissolution event.
If the company is sold or lists
The investor receives the greater of the cash-out amount or the conversion amount, based on equity ownership at the valuation cap.
If the company winds down
With no liquidity event, the investor receives the remaining cash-out amount before equity distribution, which may return part of the capital.
Key terms
Six terms, all agreed up front
Ranges are the typical figures we publish for early-stage Safers. Every agreement sets its own numbers.
Purchase amount
Typical range$250K pre-seed
$500K to $1.5M seed
The capital the investor provides at signing. Everything else in the agreement is measured against it.
Honeymoon period
Typical length12 to 18 months
A window after the investment with no repurchase payments. The company deploys the capital before any revenue obligation starts.
Revenue percentage
Typical range1% to 10% of top-line revenue
The share of gross revenue that funds quarterly repurchase payments once the honeymoon ends, negotiated to fit the company’s economics and stage.
Repurchase percentage
Typical range50% to 95% of the position
The portion of the original investment the investor agrees to sell back through revenue payments. The rest stays as equity with full upside.
Target return
Typical range2x to 3.25x the investment
The total the investor aims to receive through repurchase payments. When it is reached, repurchase obligations end. Reaching it depends entirely on company revenue.
Valuation cap
Set onceFixed at signing
The cap at which the remaining position converts to equity at a liquidity event.
Both sides of the table
For venture capital funds
What each party gets
Founders
- Company controlNo board seats and no transferred voting rights. Governance stays with the founding team.
- Equity repurchaseRevenue payments shrink the investor position, so ownership comes back as the business earns.
- Patient capitalNo built-in pressure to exit on a fund schedule.
- Transparent termsEvery parameter is set at signing with no complex waterfall.
Investors
- Earlier liquidityQuarterly payments can begin after the honeymoon period once the company has revenue.
- Equity upsideThe remaining position converts at the original cap.
- Structural alignmentPayouts grow with real operations, so both sides want the same thing.
- Dissolution priorityThe remaining cash-out amount is paid before equity distribution in a wind-down.
Invest with the Safer
Funds that want to run a Safer strategy can work with Next Wave Capital Management, LLC, an exempt reporting adviser that acts as adviser or sub-adviser to venture capital funds.
Explore Fund Advisory
Legal and accounting groundwork
Understand the terms before you sign
The Safer was developed with Polsinelli over more than a year, with feedback from dozens of founders, investors and attorneys, alongside accounting and tax guidance from Armanino for CFOs, accounting teams and tax advisors. Special thanks go to Christopher Simpson and the Polsinelli corporate and securities team.
Tools and resources
safer.wtf
Open source on GitHub
Open source on GitHub
Model the Safer yourself
Download the instrument, try the modelers and run the open-source simulators with your own assumptions.
Scenario simulator
Model a single Safer investment through its life, with quarterly cash flows and liquidity events, and generate interactive HTML reports.
View the scenario simulator (opens in a new tab)Monte Carlo simulator
Run portfolio-level scenarios to see cash flows and the spread of outcomes, with sensitivity analysis on the key assumptions.
View the Monte Carlo simulator (opens in a new tab)See the Safer in a live deal
Founders can talk through terms for their company. Investors can ask how payments, conversion and later rounds interact.
Neither Next Wave Partners nor Armanino is responsible for the content or results of using the Safer form or other documents from our website. Consult a qualified accountant and tax advisor in your jurisdiction before using these materials.