<aside> 🏆 We created a new kind of uncapped safe, the most founder-friendly safe yet. The valuation can go higher, but not lower.

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(If you’re unfamiliar with safes and the terminology in this post, see this informative explanation of safes. We’ll issue a user guide and public documents soon.)

The Neo Safe with Floor Valuation is uncapped: it will convert into equity at a price to be determined based on a subsequent financing. The conversion valuation can go higher when you raise more in a qualifying subsequent round; it won’t go below the Floor Valuation even if your subsequent round is at a lower valuation.

To qualify for increasing the valuation, the subsequent financing must be at least as much money as the original safe, and must occur within a designated time (e.g. 6 months). Also, there’s a pro rata right allowing the investor to maintain their ownership percent by investing more cash. These investor protections balance the exposure of offering a Floor Valuation.

<aside> ✅ The Neo Safe with Floor Valuation can be useful in many situations, and we intend to make it publicly available and open-sourced. Get notified when it’s available.

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Benefits to founders

If you’re a founder, the Neo Safe with Floor Valuation gives you many advantages:

Benefits to investors

If you’re an investor, the Neo Safe with Floor Valuation can help you win deals and secure ownership in ways that might not otherwise have been possible.

Balance of interests

Compared to a regular uncapped safe, the Neo Safe with Floor Valuation is better for both founders and investors. The pro rata right is a material economic benefit to investors. In return, founders get a huge signal of conviction that can help raise the next round at a higher valuation. The structure elegantly balances both parties’ interests.

Example use cases

We intend to use the Neo Safe with Floor Valuation in multiple situations: