The ante just got upped.
TechCrunch reported earlier this week that Y Combinator, the start-up accelerator, has announced updated terms for participating companies with more total cash. The group will now invest a total of $500,000 in two different forms. One is the traditional equity deal which provides $125,000 for seven percent of the company. Added to that is $375,000 in the form of an uncapped SAFE (simple agreement for future equity) note with a “most favored nation” clause. According to the TechCrunch article, “Uncapped means that there is no defined maximum price at which the $375,000 SAFE will convert to shares, while the ‘most favored nation’ language ensures that Y Combinator gets as good a deal as anyone else in a later conversion.”
Here’s a link to the Y Combinator announcement.