YC SAFE for Singapore Companies
TL;DR
A SAFE is a founder-friendly way to raise money without setting a valuation upfront.
In Singapore, a SAFE is typically adapted from the U.S. version but must comply with Singapore contract law and the Companies Act 1967.
You should work with local counsel to ensure enforceability and alignment with local corporate governance requirements.
If you’re fundraising on SAFEs in Singapore, make sure you understand how they interact with shareholder resolutions, constitutional documents, and cap table reporting under the Singapore law.
SAFE is not a debt so there’s no interest and no maturity date.
What is a SAFE?
A SAFE is an agreement between a company and an investor that grants the investor the right to receive equity at a future date. Typically, the SAFE conversion occurs during a priced equity round or upon liquidity events like an acquisition or IPO. It’s not a loan, so there’s no interest rate or maturity date.
Y Combinator published the original SAFE in 2013, with a major update in 2018 (the post-money SAFE). This version is now the global standard and is commonly used in Singapore as well, with jurisdiction-specific adjustments.
Key Features
Post-Money Valuation Cap
This is the maximum valuation at which the SAFE will convert to shares. Post-money means the cap includes the SAFE itself and any other SAFEs or convertibles.
Liquidity and Dissolution
In the event of a sale, IPO, or company shutdown, SAFEs provide mechanisms for payout or conversion, although early-stage startups often return little in dissolution scenarios.
Singapore-Specific Considerations
Governing Law
The YC SAFE defaults to California law. In Singapore, it’s standard to update the governing law to Singapore and designate Singapore as the dispute resolution forum.
Constitution (a.k.a. Articles of Association)
Singapore companies are governed by their Constitution. While U.S. startups often adopt a simple charter and bylaws, Singapore startups should review their Constitution to ensure there’s nothing that would prevent SAFE conversion or rights from being recognized (e.g., pre-emption rights, issuance restrictions, or director approval requirements).
Shareholder Resolutions
Under the Companies Act, certain share issuances or conversions may require shareholder or director approval. Founders should check that their board is empowered to issue shares upon SAFE conversion without requiring a general meeting of the shareholders.
Use of Preference Shares
While the U.S.-based startups typically issue “Preferred Stock,” Singapore uses Preference Shares, governed by both the Constitution and the Companies Act. The SAFE may need to define the class of shares to be issued clearly, as Singapore law requires specificity in share class rights.
Singapore-Specific Considerations
Not localizing the document: Simply using the YC template without changing governing law or ensuring compliance with the company’s Constitution can cause enforceability issues.
Not tracking conversions: Singaporean startups must maintain an accurate register of members and timely file share allotments with ACRA upon SAFE conversion.
Misunderstanding cap table dilution: Founders and investors often miscalculate the ownership stakes upon conversion of SAFEs, especially when stacking multiple SAFEs with different caps.
One document. Countless deals.
FAQ
The exercise price of the shares under the FAST agreement will be determined at the time of issuance and will be included in the applicable Stock Purchase Agreement.
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