Stormville Oil

Y Combinator Shareholder Agreement

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We have a standard agreement for all our investments. We are investing $125,000 in a “post-money” agreement for future equity and entering into an agreement with the Company and the founders that sets out certain policies and rights specific to YC, including a right of ownership to invest in the Company`s future financing rounds (the “YC Agreement”). A SAFE (simple agreement for future equity) is an agreement between an investor and a company that grants the investor rights to future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment. The SAFE investor receives the futures shares when a round or liquidity event occurs. SAFERs are intended to provide start-ups with a simpler mechanism to seek start-up financing than convertible bonds. Our updated safes are therefore “post-money” safes. By “post-money” we mean that the ownership of safe holders is measured after (post) all the safe money has been settled – which is now its own turn – but always before (before) the new money in the price round that converts and dilutes the safes (usually the A series, but sometimes the Seed series). The post-money vault has what we think is a huge advantage for founders and investors – the ability to instantly and accurately calculate how much of the company`s property has been sold. It`s crucial for founders to understand how much dilution is caused by each vault they sell, just as it`s fair for investors to know how much of the company`s property they bought. As a flexible, single-document security with no many conditions to trade, Safes saves startups and investors money on legal fees and reduces the time it takes to negotiate investment terms. Startups and investors usually only need to negotiate one point: the valuation cap. Since a vault doesn`t have an expiration or maturity date, no time or money should be spent on extending maturity dates, revising interest rates, etc. [1] If you`re worried about what will happen if you have to part ways with a co-founder, make sure you have a proper acquisition schedule.

In the valley, it is a typical configuration to put on a one-year “cliff” for four years. In other words, while on paper you could own 50% of the company, if you leave or are fired within a year, you don`t leave with anything. After the one-year point, you will receive 25% of your stock. Each month thereafter, you will receive an additional 1/48 of your total stock. You only earn all your shares after four years. This ensures that the founders are well-suited in the long run – and if there is a problem, you can solve it in the first year without any damage. Another good emergency measure is that only the CEO has a seat on the board of directors before a major fundraiser. This avoids board litigation in difficult decisions, for example in the unlikely event that the CEO had to fire a co-founder. Here are some of the most frequently cited reasons for unequal stock splits: As part of the launch of the new SAFE, YC announced that it is changing its standard accelerator investment terms from $120,000 for 7% to a SAFE pre-money at $150,000 for 7% on a SAFE post-money. Immediately after step #1, YC is expected to own 7% of the company. However, new investors and increasing the pool of options in steps #2 and #3 should dilute the YC Safe and all other conversion vaults, provided that these vaults are standard post-money vaults. .