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Deal Structures 3.4
A ngels use a variety of investment instruments. The two most commonly used instruments are pre- ferred shares (35%), followed by convertible debentures (33%). Simple Agreements for Future Equity (SAFEs) were used in 15% of investments. Debt instruments were uncommon, used in just 1% of cases (Figure 13). Three clear trends are apparent. First, the proportion of
deals using preferred shares has increased significant- ly in recent years (19% in 2019; 33% in 2020). Second, there has been a sharp increase in the use of SAFEs: to 15% in 2021, up from just 7% in 2020. Third, the use of preferred shares and SAFEs has been at the expense of common shares which have fallen from 38% in 2020 to just 14% in 2021.*
*SAFEs help streamline pre-seed and seed financing relative to convertible notes. SAFEs defer the need to arrive at a company valuation.
2022 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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