“Beta” Canadian post-money SAFE from YCombinator

The YCombinator SAFE page has “beta” versions of the docs for Canada, the Caymans, and Singapore.

post-money-safe-canada.docx

Note: good Canadian Startup lawyers have had Canadian versions of these docs all along, but it’s always better to have fully standardized docs for simple agreements.

2 Likes

Saw this when it came out, interesting that YCombinator is coming up with international versions of these now.

There’s basically no substantive changes from the American version, and like you said most lawyers had a similar “Canadianized” precedent based on the US YCombinator SAFE or the NACO docs in any event. The changes deal mainly with Canadian securities law compliance and changing “stock” to “shares.” Always thought “shares” sounds better.

It’s a bit curious to me that they added a currency clause confirming that the investment amount is in USD by default. Wonder how many people are going to miss that when they use it to raise exclusively in Canada for Canadian companies and run into problems.

The only major thing to note about this is that, per the switch YCombinator made a couple of years ago with all its other SAFEs, this is a post-money SAFE. Canada has not really caught up on that, and the NACO docs and most precedents I see floating around are still pre-money. As more people start using this YCombinator doc a precedent, this may shift that tide a bit and me may start seeing post-money become the default for SAFEs in Canada as well. Better for investors, worse for companies.

I use USD by default in all of my docs for my current company because we’ve got an international investor group. Makes sense to me. The template from my lawyer has a “pick CAD or USD” checkbox that I just removed and call it USD equivalent. Internally, I still do all of my accounting in CAD.

This is a long discussion. I helped make the NACO docs, I hope “someone” puts together an effort to update them.

Re: better for investors / worse for companies. There is a lot of contention around this. I prefer the post-money from a company perspective as it makes it simpler to reason about vs stacked pre-money SAFEs but I understand there are a lot of different views.

Re: better for investors / worse for companies. There is a lot of contention around this. I prefer the post-money from a company perspective as it makes it simpler to reason about vs stacked pre-money SAFEs but I understand there are a lot of different views.

My main issue with the post-money SAFE from the company side is that all the dilution from multiple SAFEs is borne by the founders. With multiple SAFES/SAFE rounds that can add up quickly.