Legal Product Actions and Insights: The SAFE

The Monax Platform is tooled to manage the complex processes, rights and obligations created by a SAFE, or any agreement.

Insights and actions: putting your contracts to work for you with Monax DealSpace.

At core, contracts are the rules of relationships of humans, companies and organizations. Automating tedious processes not only increases revenue, but it improves the relationship experience for everyone. At Monax, we are dedicated to putting legal technology to work making legal relationships flow more easily, so you and your collaborators can keep doing what you love.

From Main Street to global marketplaces, contracts are the glue that holds those relationships together. However, not all contracts are created equal. Some have better technical infrastructure than others, meaning the contract participants can put their legal relationships to work for them, more efficiently and productively. The insights and actions possible with Monax DealSpace help business to improve collaborator relations while delivering the day-today value necessary for company success.

What do we mean by insights and actions? We mean automating the little things that make business management a hassle, that can turn into big problems if not attended to as carefully as the rest of your business. Deadlines, coordination of parties, visibility of what needs to be done by whom and when, how many contracts one has and what their status is…these little details make all the difference in running a smooth operation. Even more exciting, having the information and tools to take action supported by reliable data.

The Simple Agreement for Future Equity (“SAFE”) is an example of how open-sourced contract innovations can make and grow markets.

Released by Y-Combinator in 2013, the SAFE was a contract innovation that made it simpler and easier for startups to get financing from venture capitalists. By giving this innovation away, Y-Combinator lowered the bar of entry startups faced due to complexity, speed and expense of legal services for their young companies. This in turn made more bankable startups for VC to invest in, and competition for innovation. In other words, the SAFE is a critical contract that unlocked the potential of the VC market we see today.

An automated SAFE is a smarter document that helps investors and startups alike manage their legal contracts and assets, assess their situations and make nimble decisions. The Monax Platform is tooled to manage the complex processes, rights and obligations created by a SAFE, or any agreement. The SAFE template manages the asynchronous processes for multiple stakeholders, while providing seamless proof of what happened when. Because it of the Monax Platform’s extensibility, a SAFE operating through Monax can support companies and investors throughout their value cycle.

The Monax Platform categorizes agreements based on whether they are in the process of formation, where conditions precedent are fulfilled and signatures applied, and execution, the stage where a document has become a live contract, with binding effect and asset status.

With the Monax platform, the SAFE-based legal product collects the necessary signatures in a single lane the process modeler uses to track when all identified parties have signed. In this workflow, financing contract signatures constitute agreements to a valuation cap used in the execution workflow. This seemingly simple innovation provides instant status on who has signed, and we think will prevent a lot of wasted checking-in with legal to see who has signed! This instant process insight, without friction, tells us if there’s a holdup. The actions of the legal product after signing unlock far more value on the Monax Platform.

Execution of a SAFE through its lifecycle is a bit more complex, but this is where Monax shines!

Instant Insight. In the execution model, we can track where the investor(s) and company stand in the process of execution of the SAFE contract, through the Monax DealSpace Dashboard. Task boxes and arrows reflect what needs to happen when, while decision points enable the model to react to events and choose the appropriate path, in this case, to issue standard preferred stock if the company’s pre-money valuation exceeds its valuation cap. Actions required by the company and investors are organized in horizontal swim lanes. Green-highlight task boxes are completed, while the task that is currently “to-do” is shown in amber highlight. The Monax Dealspace delivers a history of every event, as well as tamper-proof references to event provenance.

Data-driven actions. From the point of view of the investor, having this window on the operations of portfolio companies can gain even sharper insight on the performance of their investments, both as businesses and as company share certificates. Aggregation of these insights can show an investor where they might want to change their operations for increased efficiency or profit, and the Monax Legal Product Studio gives them to tools to make it happen.

Let your contracts work for you!

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Nina is Chief Commercialization Officer at Monax.

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