What is a SPAC?

What is a SPAC? A special purpose acquisition company (or blank check company), which is formed for the purpose of acquiring or merging with an operating business by a specific date, typically 24 months after the SPAC’s IPO. SPACs have been in the news lately. According to spacinsider.com, in 2020 there were 248 SPACs that became public, raising over $83 billion in proceeds. By contrast, in 2016, less than $3.5 billion in total SPAC IPO proceeds were raised from 13 SPAC IPOs. …

In this article, you will learn about the key deal points when negotiating a SAFE.

What is a SAFE?

“SAFE” stands for Simple Agreement for Future Equity. A SAFE acts like a pre-paid option or warrant but it acts like a convertible note in that it converts into equity upon a future financing. A SAFE instrument is typically used in early stage fund raising rounds and is usually the simplest to document, as shown below:

Is there a “standard” SAFE document?

Usually, investors will have a preference on the form of SAFE instrument used in a financing. For all intents…

In this article, you will learn about the key deal points when negotiating a convertible note.

What is a convertible note?

A convertible note is one method of raising funds before a larger equity fundraising round. In other words, a convertible note is sort of like a bridge financing instrument. Convertible notes are often used as a pre-series seed or pre-series A financing vehicle. A convertible note is a debt that can convert into equity of the company issuing the debt. It is usually entered into without the expectation of repayment.

Are there alternatives to convertible notes?

Yes, another popular…

Coinbase is going public. How is the business doing?

By all accounts, the business appears to be doing well. Cash on hand at the end of 2020 is at $1 billion, up from approximately $550 million at the end of 2019. Revenue for 2020 was $1.1 billion, up from $482 million for 2019 and net income for 2020 was $322 million, which is up from a loss of $30 million for 2019. Nearly all of the company’s revenue comes from transaction fees.

I heard Coinbase is using a “direct listing.” What is a direct listing?

Compaies can become publicly traded…

Mohammed Elayan

lawyer for startups.

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