It's arguable that the most innovative development in finance over the last 20 years before Bitcoin was what Y Combinator popularized with their SAFE (Simple Agreement for Future Equity) Note.

The SAFE note took the place of the convertible notes because convertible notes had a standard maturity date of two years and many companies two years in were still trying to pivot or figure out product market fit when the money was due to be paid back or to be converted into equity. This created adversarial relationships with early stage investors before any momentum was gained. The SAFE note is a simple standardized, free 5 page document with only two fields; a valuation cap and a discount rate. Of which only one of those converts at a qualified financing event. And not any time before.

As great as this is, it doesn't work for Bitcoin forward companies that denominate their business in Bitcoin, accept Bitcoin and don't plan on entering fiat capital markets ever again. Because of that, Bitcoin companies that want to raise Bitcoin need something different. Our proposal is to move back to something similar to the convertible note if you are a company that is Bitcoin only ie zero ties back into fiat systems but want to raise Bitcoin from Bitcoin only investors.

Our opinion is that the only risk reward for investing Bitcoin into a company is that the company has to make an effort to return more Bitcoin to the investors from the stream of Bitcoin payments.

If 1 Bitcoin is 1 Bitcoin and an investor invests that into a company, we believe it's reasonable to expect more than 1 Bitcoin back. We also believe that for best in class Bitcoin companies that only take Bitcoin, the World will soon realize they have to pay these companies in Bitcoin or they won't have access to the best products and services.

*Please note this idea and document are only in draft mode and meant to encourage the debate around this topic that we believe is important for the circular economy companies that may need to raise money to scale. We'd like to collaborate with NOSTR to produce something that is as innovative and helpful to both founder and investor as the SAFE note is. Critical feedback here is the most helpful and the most welcomed.

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