Founder SAFE Financing Term Sheet — Extended Form

This term sheet records the principal proposed terms of a seed-stage financing through simple agreements for future equity. Except for the provisions expressly identified as binding, it is a nonbinding discussion document and does not itself issue a security, obligate either side to close, or amend any existing instrument.

Matter Completion Sheet

Proposed Terms

1. Issuer and Investors

Company. [COMPANY NAME], a [STATE] corporation (the Company).

Investors. One or more persons accepted by the Company in its discretion after completion of the eligibility, sanctions, beneficial-ownership and securities-law checks specified in the closing checklist (each, an Investor). No person is admitted merely because it receives this term sheet or transmits funds.

Drafting instruction. Confirm that investor acceptance mechanics, countersignature and funds receipt agree across the term sheet, SAFE, side letter and closing checklist. Identify any finder, placement agent, special-purpose vehicle or adviser and obtain broker-dealer advice before activity begins.

2. Instrument and Offering Size

The Company proposes to issue [POST-MONEY / PRE-MONEY] simple agreements for future equity, substantially in the form identified in the Matter Completion Sheet (each, a SAFE), for aggregate gross proceeds of up to $[●], with a target first closing of $[●]. The Company may increase or decrease the offering size and accept or reject subscriptions before countersignature, subject to law, existing contractual rights and the binding provisions below.

No oral statement, pitch deck, capitalization model or data-room material modifies the SAFE. Any negotiated right must appear in the executed SAFE or an executed side letter identified on the closing schedule.

3. Purchase Amount and Closing Mechanics

Each Investor will fund the purchase amount shown on its signature page by same-day available funds to the account stated in independently verified wiring instructions. A closing occurs for an Investor only when the Company has received cleared funds, countersigned the SAFE and recorded the issuance in its securities ledger and capitalization platform. The Company may conduct rolling closings through [OUTSIDE DATE], but later closings must use the same economic terms unless a disclosed and approved exception applies.

The closing memorandum will state the effective time, funded amount, accepted Investor name, instrument identifier, side letter, exemption relied upon and post-closing owner. Returned, rejected or misdirected funds do not create rights under a SAFE.

4. Valuation Cap

The valuation cap is $[●]. The final SAFE must define the capitalization denominator and conversion-price formula without circularity. Before approval, counsel and finance will model at least: (a) a priced round at a pre-money valuation below, at and above the cap; (b) expansion of the option pool before and after the financing; (c) conversion of all outstanding SAFEs and notes; (d) outstanding warrants and promised equity; and (e) the effect of any shadow-preferred or liquidation-preference construct.

Founder control. The board record should state the modeled fully diluted ownership delivered to new money at the target and maximum offering sizes. Do not describe the cap as the Company’s current valuation.

5. Discount

[SELECT ONE: No discount. / Discount rate: [●]%, so the discount price equals [100 minus discount]% of the price per share paid by the cash purchasers in the equity financing.] If the SAFE includes both a cap and a discount, the conversion price will be the lower price produced by the two methods unless the final instrument expressly provides otherwise. Define rounding, fractional shares and calculation responsibility.

6. Most-Favored-Nation Right

[SELECT ONE: No MFN right. / If, before termination of the SAFE, the Company issues a later convertible security with terms more favorable to the later investor, the Investor may elect to amend its SAFE to incorporate the eligible term package described in the executed MFN provision.] The operative provision must define excluded issuances, notice content, election period, package-versus-pick-and-choose treatment, confidentiality and termination. Administrative, tax, regulatory, identity-specific or investment-size rights are not automatically economic improvements.

7. Equity Financing Conversion

Upon the closing of an equity financing meeting the definition in the SAFE, the purchase amount converts automatically into the class or series, and at the price, determined under the executed SAFE. The closing set must answer:

• whether a minimum new-money threshold applies and what issuances count toward it;
• whether conversion produces standard preferred stock or a separate shadow series;
• how liquidation preference, dividends, anti-dilution, voting and protective provisions apply to conversion shares;
• which financing documents the Investor must sign and which representations may be required;
• how the Company may limit Investor obligations, indemnities, drag-along liability and representations to appropriate several and investment-status matters; and
• who provides the conversion calculation and when an objection expires.

8. Liquidity Event

If a change of control, direct listing or initial public offering occurs before termination, the Investor receives the cash-out amount or conversion amount specified by the SAFE, subject to the transaction waterfall, senior securities, lawful payment limits and the Investor’s election mechanics. The final instrument must define the transaction perimeter, affiliated transactions, rollover equity, contingent consideration, escrow, holdback and treatment of mixed consideration.

An Investor should not receive a return inconsistent with the actual priority of outstanding securities. The Company must run a transaction waterfall using current capitalization immediately before any liquidity event.

9. Dissolution Event

On a voluntary termination of operations, general assignment for creditors or other dissolution event defined in the SAFE, the Investor’s contractual payment right ranks as stated in the executed instrument, generally behind creditors and on the negotiated parity with other convertible instruments. Payment remains subject to applicable insolvency and distribution law. A financing shortfall or unsuccessful business strategy alone is not a dissolution event unless the instrument says so.

10. Company Capitalization

The SAFE must contain one complete definition of Company Capitalization that allocates each of the following: outstanding common and preferred stock; issued and promised options; the available option pool; warrants; SAFEs and other convertible securities; shares reserved for conversion; and any securities excluded from the denominator. The same definition and assumptions must appear in the board model and closing memorandum.

No Investor may rely on a percentage-ownership estimate unless the estimate is in a dated written model stating all assumptions and that future issuances dilute ownership.

11. Pro Rata Participation

[IF GRANTED] Subject to the executed side letter, the Investor may purchase its defined pro rata share of securities in the next equity financing. The right is personal to the eligible holder, subject to investment-size and major-investor thresholds, allocation procedures, securities-law compliance, notice and response periods, transfer limits and a sunset on [EVENT]. The denominator, excluded securities and oversubscription treatment must be explicit.

12. Information and Observer Rights

[IF GRANTED] The rights listed in Schedule 2 are contractual side rights, not terms implied by ownership of the SAFE. Information rights are subject to confidentiality, privilege, competitive-sensitivity, privacy and law-based withholding provisions. Any board-observer right is nonvoting, may be excluded for privilege, conflicts or sensitive matters, carries no fiduciary status by implication, and terminates on the specified sunset event.

13. Transfer Restrictions

The SAFE may be transferred only as permitted by its terms and applicable securities laws. Permitted transfers should be limited to specified affiliates, estate-planning vehicles or other approved transferees that assume the transferor’s obligations, with notice and evidence satisfactory to the Company. No transfer relieves the transferor of confidentiality or other accrued obligations. The Company may require a legal opinion when reasonably necessary.

14. Company Representations at Closing

The definitive documents should contain appropriately qualified representations concerning organization, authority, capitalization, valid issuance, conflicts, required consents, litigation, compliance with law, intellectual-property ownership, financial information, taxes, sanctions, brokers and the private-offering exemption. The representation set must be proportionate to a seed financing and tested against a disclosure schedule; this term sheet is not itself a representation package.

15. Investor Representations at Closing

Each Investor should represent its authority, investment intent, sophistication, ability to bear loss, access to information, accredited-investor status if applicable, absence of prohibited reliance, sanctions compliance, source of funds, beneficial ownership and broker involvement. If Rule 506(c) is selected, the Company must implement verification procedures that go beyond a checked questionnaire.

16. Conditions to Each Closing

Conditions include: completed board approval; executed SAFE and any approved side letter; cleared funds; accurate investor questionnaire; no legal prohibition; required third-party consents; completion of sanctions, bad-actor and beneficial-owner checks; capitalization reconciliation; and receipt of any other item listed in the closing checklist. Conditions may be waived only by the party entitled to them and only in a written closing record that does not undermine the selected exemption.

17. Use of Proceeds

The Company expects to use proceeds for working capital and general corporate purposes, including [PRODUCT / PERSONNEL / GO-TO-MARKET], subject to board oversight and the Company’s operating plan. This statement is not a covenant to achieve projections. Identify any debt repayment, founder liquidity, related-party payment or other use requiring specific disclosure and approval.

18. Securities-Law Structure

The offering will be conducted under [Rule 506(b) / Rule 506(c) / Section 4(a)(2) / other exemption] and applicable state-law exemptions. The Company and its agents will follow the communications, investor-eligibility, information-delivery, integration, resale-restriction, Form D and state-notice plan approved by securities counsel. No general solicitation may be used in a Rule 506(b) offering. A public website, demo-day communication, social-media post or press outreach must be reviewed before release.

19. Expenses

[SELECT: Each party bears its own expenses. / At the initial closing, the Company reimburses the lead Investor’s reasonable documented counsel fees up to $[●], excluding disputes among Investors and subject to receipt of an invoice.] No expense right authorizes an Investor to direct Company counsel or creates a closing condition unless expressly stated.

20. Confidentiality and Publicity

The existence and terms of this proposal, and nonpublic information exchanged in connection with it, are confidential subject to existing confidentiality agreements and customary exceptions for professional advisers, financing sources and legal requirements. Neither side may use the other’s name or marks in publicity without written consent, except for legally required disclosure after reasonable prior notice where permitted.

21. Exclusivity

[SELECT ONE: No exclusivity. / For [●] days after acceptance, the Company will not knowingly solicit or enter a competing SAFE or convertible-note financing, excluding discussions listed on Schedule 3.] Any binding exclusivity must include fiduciary and legal outs, permitted ordinary-course investor discussions, termination events and a clearly defined remedy. A founder should not accept an open-ended no-shop for a seed instrument.

22. Nonbinding Effect; Binding Provisions

Sections [Confidentiality and Publicity], [Expenses], [Exclusivity], [Governing Law], [No Reliance; No Partnership], and this Section are intended to be binding when signed. All other provisions are expressions of present intent only. No party is obligated to negotiate, continue negotiations or close unless definitive documents are executed and all conditions are satisfied or waived. Either party may stop discussions at any time, subject to the binding provisions.

23. No Reliance; No Fiduciary or Partnership Relationship

Each party relies on its own advisers and the definitive documents, not projections or statements outside those documents. This term sheet does not create a fiduciary, partnership, agency, joint-venture or advisory relationship. Nothing limits liability for fraud or another liability that law does not permit a party to waive.

24. Governing Law; Forum

The binding provisions are governed by the law of [STATE], without regard to conflicts rules. The parties submit to the state and federal courts located in [COUNTY, STATE], subject to any selected jury-waiver or arbitration provision reviewed for enforceability and strategic fit. The definitive SAFE may contain its own governing-law provision.

25. Expiration; Counterparts; Electronic Signatures

This proposal expires at [TIME] [TIME ZONE] on [DATE] unless extended in writing. Counterparts and electronic signatures are effective to the extent permitted by law. A signature acknowledging nonbinding terms is not a subscription, SAFE issuance or funds-transfer instruction.

Acknowledged and Agreed as to the Binding Provisions

[COMPANY NAME]
By: ______________________________
Name: [●]
Title: [●]
Date: [●]

[LEAD INVESTOR NAME]
By: ______________________________
Name: [●]
Title: [●]
Date: [●]

Schedules and Closing Tools

Schedule 1 — Economic Terms and Capitalization Model

Schedule 2 — Side Rights Register

Schedule 3 — Existing Discussions and Carve-Outs

Schedule 4 — Founder Decision Record

Quality-Control Scenario Tests

• Model a priced round below, at and above the valuation cap and reconcile every resulting share count.
• Model a sale of the Company before a priced round, including debt, senior securities, escrow and earnout.
• Add a later SAFE with a lower cap and test the MFN notice, election and package rules.
• Add a strategic investor seeking information and observer rights and test privilege and competitive exclusions.
• Assume a social-media fundraising announcement and retest the selected private-offering exemption.
• Assume one Investor funds late or to the wrong account and confirm no instrument is inadvertently issued.
• Confirm the board record, capitalization platform, securities ledger and closing memorandum all show the same issuance.

Website Posting README — Not Part of the Term Sheet

What this resource does. This extended-form term sheet helps a founder and counsel organize a SAFE financing before definitive instruments are circulated. It emphasizes dilution modeling, offering discipline, side-right consistency and closing evidence.

Prompt to complete the form. “Act as experienced startup financing counsel. Using only verified information I provide, complete EF-081 for a [STATE] corporation proposing a [post-money/pre-money] SAFE raise. First produce a missing-information list covering capitalization, prior convertibles, target and maximum raise, cap, discount, MFN, side rights, offering exemption, solicitation history, investor eligibility, approvals, conflicts, brokers, closing mechanics and notice filings. Then produce (1) a clean selected term sheet, (2) a bracket-and-alternative report, (3) a capitalization-model assumptions table, (4) a definitive-document consistency checklist and (5) a legal and specialist escalation list. Do not invent facts, securities-law conclusions or ownership percentages. Keep the term sheet nonbinding except where expressly selected.”

Required human review. Startup finance counsel, securities counsel, tax counsel when instrument treatment is material, finance/cap-table owner and the approving board. State-law notice and blue-sky requirements must be refreshed for each investor location.

Originality boundary. This is clean-room original drafting. It contains no publisher form text, annotation, marking, branding or proprietary commentary.

Posting instructions. Publish the companion HTML only after legal and editorial review. Keep this README visually separated from the operative term sheet; label the Word download “practitioner master”; preserve the not-execution-ready warning; add the reviewing lawyer and review date; and link related SAFE, board-consent and closing-checklist resources without implying that one document completes the financing.