Corporate Finance
For early stage companies and small businesses, one of the key factors to successful growth is securing adequate, appropriate funding. Particularly for those with immediate and long-term growth potential, venture capital is a very common form of private early stage financing. The term “venture capital” will be one which is familiar to most entrepreneurs, however the structure that such an early stage investment may take is not always as easily known.
If you have spent any amount of time within the startup ecosystem in the past half decade, you’re likely familiar with the concept of the Simple Agreement for Future Equity, or SAFE. First introduced by YCombinator in 2013, the SAFE has caught on as a quick and efficient way of raising early capital. However, despite being labelled as “simple” (it’s right there in the name!), SAFEs can quite often be confusing to the uninitiated.
This article seeks to lay bare the good, the bad, and the ugly of the SAFE by providing the context necessary to better understand its purpose and underlying mechanisms.
One of the greatest challenges facing entrepreneurs on their journey to take a business idea and turn it into a functioning, profitable company is securing investment capital. Competition for this investor capital can be fierce, so early stage startup companies are often looking for ways to stretch those investor dollars further and further. In British Columbia, one of the ways they can do this is to offer a 30 percent tax rebate to eligible investors, through the two programs created under the Small Business Venture Capital Act: the Venture Capital Corporation and the Eligible Business Corporation programs.
