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Simple Agreement for Future Tokens
I need a Simple Agreement for Future Tokens (SAFT) for a blockchain startup looking to raise funds from accredited investors, with clear terms on token allocation, vesting schedule, and compliance with Nigerian regulations. The agreement should include provisions for token issuance upon network launch and outline investor rights and obligations.
What is a Simple Agreement for Future Tokens?
A Simple Agreement for Future Tokens (SAFT) helps Nigerian tech startups raise funds by promising investors future cryptocurrency tokens once their blockchain platform launches. It works like a forward contract, giving early backers special rights to tokens before they're available to the public, while complying with Nigerian Securities and Exchange Commission guidelines on digital assets.
Under Nigerian investment laws, SAFTs create a clear legal framework for token presales, protecting both the project developers and investors. The agreement typically includes key details like token allocation, vesting periods, and release conditions - making it easier for local blockchain projects to secure funding while staying within regulatory boundaries set by the SEC and CBN.
When should you use a Simple Agreement for Future Tokens?
Use a Simple Agreement for Future Tokens when launching a blockchain project in Nigeria that needs early-stage funding but doesn't have tokens ready for immediate distribution. This agreement proves especially valuable for tech startups developing decentralized platforms who want to secure investment while their technology is still under development.
The SAFT becomes crucial when dealing with sophisticated investors who understand cryptocurrency markets and blockchain technology. It provides a structured way to handle token presales while complying with Nigerian SEC regulations on digital assets. The agreement works best for projects with clear development timelines and token economics already mapped out.
What are the different types of Simple Agreement for Future Tokens?
- Standard SAFT: Basic version used by Nigerian blockchain startups, focusing on token distribution terms and investment amounts
- Milestone-Based SAFT: Links token release to specific project achievements, protecting investors through development checkpoints
- Hybrid SAFT: Combines token rights with equity-like features, common in fintech projects requiring SEC approval
- Time-Locked SAFT: Includes specific vesting periods and release schedules aligned with Nigerian securities regulations
- Jurisdiction-Specific SAFT: Tailored to meet both Nigerian SEC and Central Bank digital asset requirements
Who should typically use a Simple Agreement for Future Tokens?
- Blockchain Startups: Issue SAFTs to raise capital during early development stages of their token-based platforms
- Angel Investors: Provide early-stage funding in exchange for future token rights at preferential rates
- Legal Counsel: Draft and review agreements to ensure compliance with Nigerian SEC regulations
- Investment Banks: Facilitate SAFT transactions between startups and institutional investors
- Compliance Officers: Monitor token distribution and vesting schedules for regulatory adherence
- Project Developers: Execute technical milestones outlined in the SAFT agreement
How do you write a Simple Agreement for Future Tokens?
- Project Details: Document your blockchain platform's technical specifications and development timeline
- Token Economics: Define total token supply, distribution ratios, and vesting schedules
- Investment Terms: Specify investment amounts, token price calculations, and conversion mechanisms
- Regulatory Compliance: Verify alignment with Nigerian SEC guidelines on digital assets
- Milestone Structure: Outline specific project achievements that trigger token distributions
- Risk Disclosures: List potential project risks and market uncertainties
- Signing Authority: Confirm authorized representatives from both parties have proper documentation
What should be included in a Simple Agreement for Future Tokens?
- Party Details: Full legal names, addresses, and registration details of token issuer and investors
- Token Specifications: Detailed description of future tokens, including rights and restrictions
- Purchase Amount: Investment sum, token pricing formula, and payment terms
- Distribution Terms: Token release conditions, vesting schedule, and delivery mechanism
- Project Milestones: Specific development targets linked to token distribution
- Regulatory Compliance: SEC registration requirements and CBN digital asset guidelines
- Termination Rights: Conditions for agreement cancellation and refund procedures
- Dispute Resolution: Nigerian jurisdiction clause and arbitration procedures
What's the difference between a Simple Agreement for Future Tokens and a Simple Agreement for Future Equity?
A Simple Agreement for Future Tokens (SAFT) differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects, though both are investment instruments used in Nigeria's startup ecosystem.
- Investment Output: SAFTs promise future cryptocurrency tokens, while SAFEs convert to company equity shares
- Regulatory Framework: SAFTs fall under Nigerian SEC's digital asset guidelines, while SAFEs follow traditional equity investment rules
- Trigger Events: SAFTs activate upon token generation or platform launch; SAFEs convert during equity funding rounds
- Risk Profile: SAFTs carry additional cryptocurrency market risks and regulatory uncertainty, whereas SAFEs primarily face standard business risks
- Target Projects: SAFTs suit blockchain-based ventures specifically, while SAFEs work for any startup seeking early-stage funding
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