TL;DR - SAFE and KISS are ways for young startups to get funding fast.
Helpfulness - 5
Topic Tags - SAFE, KISS, debt, seed,
- What is a SAFE?
- What is a KISS?
- Traditional debt may be hard for start-ups to acquire: enter SAFE and KISS.
- These contracts are usually short, 5 pages, and are not elaborately negotiated.
- These contracts allow the investor to convert the money invested into preferred stocks at a discounted price when the start-up raises money from equity.
- SAFEs convert at any future equity financing, the terms of investment are also usually deferred till then.
- SAFEs have valuation caps, which favors the investor and protects them from early exits.
- SAFEs do not have an expiration date or accrue interest, no exploding clauses, and only negotiable topics are cap and discount. Full clauses listed on the source.
- KISS has similar goals to SAFE, fast cheap funding for young startups.
- KISS may or may not have an interest and maturity date. If they have a maturity date, it is 18 months. KISS also has an MFN clause, which helps the investor trade-in for “better securities in the future if issued by the company”. KISS also has exit agreements and other clauses. Full clauses listed on the source.