Am I able to sign this SAFE?
Dolan Williams
LawyerOk so legally you can’t sign unless you’re an accredited investor. To be an accredited investor, you generally need to meet certain income or net worth thresholds. One way is having an individual income over $200,000 per year (or $300,000 with a spouse) for the last two years, with an expectation of the same this year. Another way is having a net worth of over $1 million, not counting your primary home. There are also other ways, like holding certain professional financial licenses, but those are the main routes. So in the end it is possible you may sign. The law doesn’t require you to have registered with the Securities and Exchange Commission.
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Am I able to sign this SAFE as a Non-Accredited investor?
Hello there! What is it about the agreement that concerns were about whether you would be able to sign it? I am currently in an area with spotty reception, but I promise I’ll be with you as often as possible
Dolan - Attached is the SAFE. I'm concerned about
The form is the standard Y Combinator boilerplate SAFE. I'm primarily concerned with section 4, paragraph B. I am not an accredited investor. I'm joining during the Friends and Family round.
Ok got it! Do you have a copy of the clause you can upload for me?
4. Investor Representations (a) The Investor has full legal capacity, power and authority to execute and deliver this Safe and to perform its obligations hereunder. This Safe constitutes a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. (b) The Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act, and acknowledges and agrees that if not an accredited investor at the time of an Equity Financing, the Company may void this Safe and return the Purchase Amount. The Investor has been advised that this Safe and the underlying securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Investor is purchasing this Safe and the securities to be acquired by the Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time.
Following up
Hello! Thank you for your patience. I was unable to gain access to this site yesterday for some strange reason but I am reviewing your issue ASAP.
Ok so legally you can’t sign unless you’re an accredited investor. To be an accredited investor, you generally need to meet certain income or net worth thresholds. One way is having an individual income over $200,000 per year (or $300,000 with a spouse) for the last two years, with an expectation of the same this year. Another way is having a net worth of over $1 million, not counting your primary home. There are also other ways, like holding certain professional financial licenses, but those are the main routes. So in the end it is possible you may sign. The law doesn’t require you to have registered with the Securities and Exchange Commission.
I do not make $200k per year, nor do I have a net worth over $1mm. At one point, I held a [Financial License], but I no longer do.
Ok got it! If that is the case, I strongly recommend having them revise it and removing those sections entirely or stating in an amendment, “This section shall not apply should the signer not be an accredited investor, but investor shall still be held liable to all other terms and conditions herein.”