[Consultation] Drafting SAFE Investment Agreement (Conditional Equity Acquisition Agreement)

Law firm Veat was commissioned by venture capital company A and drafted a conditional equity purchase agreement (SAFE investment agreement) in Korean.

SAFE (Simple Agreement for Future Equity) is a contract primarily used when investing in early-stage startups where objective valuation is difficult or impossible due to the absence of business operations, and it establishes only minimal conditions for rapid investment. Once the minimum conditions are set, investment is made quickly, and subsequent investments are made when the company's valuation is assessed, which then determines the equity and discount to be provided to the SAFE investor based on that valuation.

According to the “Act on Promotion of Venture Investment” (Venture Investment Act), a SAFE investment agreement (conditional equity purchase agreement) must not have a repayment maturity date for the investment amount, nor generate interest, and is a contract executed when the invested company experiences changes in capital. In such cases, the SAFE investment agreement (conditional equity purchase agreement) must be executed, and the fact that this agreement has been executed must be notified in writing to the counterparties of the agreement. (Venture Investment Act Enforcement Rules). In addition to these, we have provided the SAFE investment agreement with provisions for the invested company's stock issuance conditions (timing, conversion price, discount rate, etc.).

These regulations aim to help avoid disputes by obtaining the consent of all interested parties and notifying them, as SAFE investment agreements can result in fluctuations in stock and capital.

Law firm Veat leverages its extensive experience gained from handling various investment cases, including SAFE investment agreements, to ensure that early-stage companies receive the necessary investments safely and quickly. We are committed to assisting you in this process.

Specifically, Law firm Veat strives for efficient and prompt legal advice through direct consultations with the assigned attorneys, and we encourage you to contact us at any time with questions related to investment contracts such as SAFE investment agreements (conditional equity purchase agreements), initial investment fundraising for early-stage companies, and any other legal advice you may need.