SAFE & Convertible Notes
GlobalB Law advises founders and early investors on SAFE agreements and convertible notes, the bridge instruments that power most pre-seed and seed-stage financings for technology ventures.
Simple Agreements for Future Equity (SAFEs) and convertible notes are the dominant instruments for early-stage financing because they allow companies to raise capital quickly without fixing a valuation at the time of the round. GlobalB Law advises on the selection, structuring, and drafting of these instruments for Turkish companies, US-incorporated entities, and cross-border dual structures where the issuing entity may be a Delaware company with Turkish operations.
A SAFE is not a loan, it converts to equity at a future priced round, typically carrying a valuation cap and/or a discount rate. A convertible note is a debt instrument with interest that also converts, but carries additional considerations around maturity, default, and the interaction with Turkish debt regulations. We advise on which instrument is appropriate given the issuer's jurisdiction, the investor's profile, and the anticipated timeline to a priced round.
For Turkish founders, a recurring challenge is that the SAFE, developed by Y Combinator for US companies, does not have a direct equivalent in Turkish law, and certain mechanics (such as automatic conversion and pro-rata rights) require careful adaptation to be effective under Turkish Commercial Code. We draft Turkish-law-compatible SAFE analogues and advise on the cross-border coordination required when both Turkish and foreign investors participate in the same bridge.
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常见问题
常见问题解答
Can a Turkish company issue a SAFE?
Turkish law does not have a statutory SAFE instrument. However, a Turkish company can issue a contractual arrangement that replicates SAFE economics, essentially a contract conferring an option to subscribe for shares at a future priced round on agreed terms. The drafting must comply with Turkish Commercial Code rules on share issuance and capital increases to ensure that the conversion right is enforceable.
What is a valuation cap and why does it matter?
A valuation cap sets the maximum valuation at which a SAFE or convertible note will convert into equity. If the priced round is at a higher valuation than the cap, the early investor's investment converts as if the company were valued at the cap, giving the investor more shares. It is the primary economic protection for early investors taking higher risk.
Is a convertible note better than a SAFE for a Turkish company?
It depends. A convertible note is structurally cleaner under Turkish law because it is a loan (a recognised legal instrument), but it creates debt on the balance sheet, carries interest, and has a maturity date that can create pressure. A SAFE analogue avoids debt but requires careful drafting. We advise on the right choice based on the company's financial position, investor expectations, and timeline.
What happens to a SAFE if a priced round never occurs?
Most SAFEs include a change-of-control conversion provision, meaning the SAFE converts to equity before an acquisition. If no priced round and no acquisition ever occurs, the SAFE holder typically has no liquidation rights, this is a risk investors accept in exchange for the simple, low-friction instrument. We advise investors on when to negotiate additional protections such as a dissolution clause.
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