SeedSAFT launches in Singapore: Raise with tokens on SeedLegals

SeedSAFT, the first automated SAFT for companies that want to raise cash now, mint tokens later, has launched in Singapore.

While there’s been a lot of less-than-good news about the crypto and token space in the last few months, we continue to see companies in the web 3.0 space looking to issue blockchain-based tokens as a fundraising strategy, and we wanted to help.

To launch SeedSAFT in the UK, we analysed dozens of the different SAFTs and worked with industry leaders to build what we hope will become the new standard. Over the last few months we’ve been working hard in collaboration with players in the Singapore web 3.0 ecosystem to ensure SeedSAFT works for the Singapore market.

We’re always working to make fundraising easier, faster and more economical. And when it comes to the documentation involved, we believe crypto doesn’t have to be cryptic.

In this post:

• SAFT fundamentals
• Who can use a SeedSAFT, and when?
• SeedSAFT key terms

SAFT fundamentals

SAFT stands for Simple Agreement for Future Tokens, and it follows the same basic principles as the SAFE (Simple Agreement for Future Equity) and our SeedFAST.

A SAFE or SeedFAST allows investors to invest now with the investment converting into shares at some future time when the company does a funding round. A SAFT allows purchasers to pre-pay for tokens that haven’t been released yet. The purchaser receives their tokens at a future time following a token generation event when tokens are issued.

Traditionally, investors buy shares with the hope that the value of the company will grow and with it the value of their shares. With a SAFT, the purchaser puts their cash upfront for tokens, with the hope that there will be a market for those tokens later.

When you issue shares, investors generally understand what ‘shares’ means and the rules of equity investing (return of capital on a sale of the company, preemption, voting rights, etc). But with tokens, especially ones that haven’t launched yet, investors will want more information about what the tokens do and how they work, the so-called ‘tokenomics’, before they’ll give you their money.

That’s why SAFTs typically come with a whitepaper, or link to an online whitepaper that describes the token, its uses and the token’s return of capital potential. It’s roughly equivalent to a pitch deck in a funding round.

Who can use a SeedSAFT, and when?

SeedSAFT helps you bring in funds before you’ve fully developed the token, but ideally after you’ve already developed a sufficiently detailed description of the offering. SeedSAFT is designed to raise investment once you have a clear idea of how the token will work, including its price and tokenomics.

If you’ve already started issuing tokens, then you’d need a Token Purchase Agreement instead of a SAFT. You might not actually need any agreement at all if the conditions of subscription are embedded within the token’s smart contract.

To create a SeedSAFT, first you’ll need:

• your company to be registered in Singapore
• a whitepaper detailing the token’s specifications. This isn’t legally binding, but it’s expected that you stick as closely as possible to the plan you set out here. A whitepaper usually includes:
  • the tokenomics
  • your token distribution plan, including prices and stages of distribution
  • how you’ll issue the tokens to the purchaser
• an estimate of when your token generation event will take place

If your token plans aren’t yet at this stage or you’re already ready to put your tokens into circulation, then you’ll need a Token Warrant or a Token Purchase Agreement instead.

Speak to our team before you create a SeedSAFT so we can make sure that it’s the best solution for your needs.

SeedSAFT key terms

With SeedSAFT, you decide whether the purchaser will pay in fiat, cryptocurrency, stablecoin or another token. Your SeedSAFT will also include the details of the account or wallet the payment will be paid into so you can receive your funds directly.

The SeedSAFT sets out:

• the discount to the token price at launch, if any
• the longstop date, if any – this is the deadline for a token generation event to take place. If no tokens have been issued by this point, then the payment is refunded
• information about the vesting schedule and lock-up rules that restrict the purchaser’s ability to sell or transfer the tokens
• the option to provide a refund to your purchasers if the tokens are not issued by the longstop date, or if the company is liquidated, or if the funding target is not reached by the funding deadline (if you have one)

When you create your SeedSAFT, the SeedLegals platform also creates all the supporting documents you might need, including an investor consent notice, board resolution and shareholders resolution.

How can we help?

If you’re looking for support on correctly structuring your tokens, please seek specialist advice.

Our step-by-step workflow, inline instructions and expert help from our team make it quick and easy to generate the documents you need for your token raise. And as with everything on SeedLegals, it’s easy to sign, share and store online.

Speak to our team today to find out if SeedSAFT is right for you. 

*Disclaimer: The information contained in this article does not constitute and should not be treated as legal, tax, accounting, or financial advice.