Raising investment through SAFE Notes in India

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Anshuman Ranjan

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Apr 8, 2020, 6:20:05 AM4/8/20
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Dear Members,

1 - Can anyone clarify if raising investment in a DPIIT recognized startup through SAFE Notes format is legal ?

2 - Is there a minimum amount per investor mandated ? (for e.g in convertible notes it is 25 lacs)

3 - What is the procedure and compliance to be followed?

Thanks
Anshuman

Sangeet Sindan

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Apr 9, 2020, 1:13:02 PM4/9/20
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SAFE (Simple Agreement for Future Equity) is typically referred to in context of Y-Combinator investment and the corresponding agreement. In India, for Start-Ups the government has allowed the similar instrument mostly in the form of convertible notes. Convertible Note can be issued subject to following conditions: Minimum amount of convertible note is Rs. 25 Laksh, by 5th year the Company has to either repay the amount or it has to be converted to equity based on pre-agreed valuation and formula. The name of the agreement may be titled as "Convertible Note Purchase Agreement".


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gutt...@gmail.com

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Apr 9, 2020, 1:26:08 PM4/9/20
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anyone give more info and details if any company plans it's investment what can be the scheme,benefits and all

Anshuman Ranjan

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Apr 10, 2020, 5:16:04 AM4/10/20
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There is an India specific format for SAFE called iSafe which is used by some VCs. https://www.100x.vc/isafe

Which is basically a form of Compulsory Convertible Preference Shares.

I wanted to understand the legal and secretarial formalities required to execute such an instrument?

Thanks
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