EXECUTIVE SUMMARY Investment Activity in 2021
49
Sharp Increase in Use of SAFE Notes FIGURE D
Preferred Shares 35.2%
Convertible Debt 33.1%
In 2021, angel investors structured deals using a variety of investment in- struments. Preferred shares (32%) and convertible debentures (25%) were the most commonly used instruments, while SAFE notes (Simple Agreement for Future Equity) structured 15% of deals. By contrast, debt instruments were uncommon in 2021, structuring just 2% of deals. Two clear trends are apparent. First, the proportion of deals using preferred shares has increased significantly in recent years (19% in 2019; 33% in 2020). Second, there has been a sharp increase in the use of SAFEs, up from 7% in 2020.
SAFE Notes 15.5%
Common Shares 14.1%
Debt 1.4%
Warrants 0.7%
What is a SAFE?
The Canadian Simple Agreement for Future Equity (SAFE) is modeled after the American SAFE first developed by Y Combinator, a prominent Bay Area incubator. Essentially, SAFEs are a form of investment contract between startups and investors wherein investors, in return for contributing capital, obtain the right to receive equity shares in the startup following the occurrence of pre- determined trigger events.
2022 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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