INVESTMENT STRUCTURE

This document applies to the following Creator Awards’ event(s): São Paulo.

 

If I win a Creator Award, how will I receive my prize?

Creator Awards prizes vary depending on what type of company you are. Artists and nonprofits will receive cash prizes, while entrepreneurs, startups, and other for-profit companies will receive Simple Agreement for Future Equity structure Investment from WeWork. 

**FOR BRAZIL ONLY: In Brazil, entrepreneurs, startups, and other for-profit companies will receive the investment based on a Convertible Loan Agreement (Contrato de Mútuo Conversível em Participação Societária).

How do I know if I qualify as an artist?

For the Creator Awards, we define “performing artist” as someone with a specific artistic purpose driving their project, whether in music, film, visual arts, or a similar creative field. Take for example a dancer who wants to create a performance celebrating the stories within a specific community. They would count as an artist because any success of their resulting performance (monetary or otherwise) would be a beneficial side effect of their primary goal.

What is a Simple Agreement for Future Equity structure Investment*?

The agreement itself states that an investor (in this case WeWork) will invest money in a company (in this case any for-profit Creator Awards winner), in exchange for the right to purchase stock in a future equity round. 

**FOR BRAZIL ONLY: The Convertible Loan Agreement, investment structure applied in Brazil, is one of the legal instruments used for fundraising by startups. This is an investment (mutual), whose debt value may convert (convertible) into future equity interest. The contract guarantees a loan of securities by the investor (in this case, WeWork) to the company (in this case, the winner) in exchange for the possibility of a return of the investment in the form of conversion into a portion of the company’s share capital or, in the last case, in the form of a return of the amount invested. 

How does a Simple Agreement for Future Equity structure Investment work?

After for-profit Creator Awards winners sign their Simple Agreement for Future Equity structure Investment agreement, WeWork will wire them their prize money. From there, winners can immediately begin using the funding for their business. If at any point in the future, the winner’s company enters another funding event, an IPO, or an acquisition, they will grant a stake of their company to WeWork. In this event, WeWork gets no cap or discount, and does not take any more favorable terms than what’s been negotiated in the next round.

(Need a visual explanation? See here for an infographic about Simple Agreement for Future Equity structure Investment.)

**FOR BRAZIL ONLY: As to the Convertible Loan Agreement, applied in Brazil, after the for-profit winners of the Creator Awards sign their Convertible Mutual Agreement, WeWork will transfer the prize money in accordance with the terms set forth in the Terms and Conditions. From then on, the winners will be able to use the investment to grow their business. If, at any time in the future, within 10 (ten) years, the winning company obtains another financial event of any nature, an Initial Public Offering of Shares or an acquisition or merger, WeWork shall have the option, at its sole discretion, to convert the amount equivalent to its investment in the capital stock of the winning company. In this case, WeWork will not receive any limits or discounts and will not obtain more or less favorable conditions than those established in the subsequent negotiation. (Need a graphic explanation? Take a look here.)

I’m a small business owner, and I will not be seeking a round of funding or an IPO. Do I still have to take a Simple Agreement for Future Equity structure Investment?

Yes. However, as long as there is no “liquidity event,” “equity financing,” or “dissolution event,” you can continue business as usual without WeWork owning any stock in your company. 

(In Brazil – if no other event occurs (i.e. equity financing, liquidity event or dissolution event) within 10 years, the winner will have to pay back the prize money)

**FOR BRAZIL ONLY: In case of the Convertible Loan Agreement, observed in Brazil: Yes. However, as long as there is no “liquidity event” or “equity financing” or “dissolution event”, you may carry on business normally without WeWork owning shares of your company. In this case, however, at the end of the ten (10) year period, the value received in premium must be returned to WeWork (without interests).

What happens if I sign a Simple Agreement for Future Equity structure Investment and then my company goes under or declares bankruptcy? Would I need to pay WeWork back?

In a “dissolution event,” WeWork would not hold a security interest in your company; dissolution rules specific to your jurisdiction of organization and entity type would apply. To the extent that there are funds available for distribution to equity holders, your company would be required to pay WeWork back before any payments to stockholders.  However, we’d like to emphasize that in a “dissolution event” scenario, it’s generally unlikely that there would be any funds left to distribute to WeWork (or any other equity holders).

**FOR BRAZIL ONLY: In case of the Convertible Loan Agreement, observed in Brazil: In a “dissolution event,” WeWork would not have a warranty claim on your company. Specific dissolution regulations apply to the jurisdiction of your organization or type of entity. In the event that funds are available for distribution to equity holders, your company must pay WeWork before making any payment to shareholders. However, we would like to emphasize that, in the case of a “dissolution event,” it is unlikely that funds will be available to distribute to WeWork (or any other equity holder).

Can we negotiate the Simple Agreement for Future Equity structure Investment?

While we understand these kinds of decisions are typically complex, we’ve carefully chosen a structure that we’re confident will be the most helpful and flexible for winners, and that can be signed easily without modifications. To keep things streamlined and help winners access their prizes quickly and fairly, the Simple Agreement for Future Equity structure Investment is not negotiable. All for-profit winners will be signing the same Simple Agreement for Future Equity structure Investment agreements with the same terms. 

How will my Creator Awards application be judged?

Your application will be judged on the following guidelines: 1) Creativity. How original is your approach? 2) Innovation. Are you bringing a new perspective to light? 3) Capability. Do you have a plan for executing your goals? 4) Impact. What impact does your business have on the community?

Please note: Finalists pitching at their regional events will also be judged based on presentation.

Does my business need to be a certain corporate form to be eligible for a Simple Agreement for Future Equity structure Investment?

For the purposes of properly executing a Simple Agreement for Future Equity structure Investment agreement, you will need to either be a C-Corp or LLC for the majority cities (and LTD for Israel)

I am based in a Creator Awards eligible country outside of the US but have a US-corporate form (e.g., Delaware C-Corp), what agreement would I enter into if I win?

If your parent company is US-based (i.e. not a subsidiary), as long as your principal place of business and operations is in a Creator Awards eligible country, your company can apply to that country’s Creator Awards and you would be eligible to enter into a US SAFE Agreement. Otherwise, you would sign the applicable regional investment document.

For example, if your business is based in Brazil but your parent corporation is registered in Delaware, you can apply to the Brazil Creator Awards and would receive your funding through a US SAFE agreement. If you are a Brazilian company registered in Brazil, you would receive your funding through the Brazilian investment document.

Did we miss something? Still have more questions?
Email us at creatorawards@wework.com.

*These materials are provided for informational purposes only. These materials and the information and content contained herein are not offered as legal advice and should not be construed as such. The descriptions contained in the materials, including regarding any transactions, results, or potential outcomes, are not intended to suggest or guarantee that similar results can or would be obtained in any particular matter or scenario. These materials are not intended to serve as a comprehensive discussion of all the potential issues, considerations, factors, or concerns that may apply to your particular circumstances. You should seek professional legal and tax advice before using, acting on, or relying upon any information contained in these materials. For more information about Simple Agreement for Future Equity structure Investment, please review the Y Combinator Simple Agreement for Future Equity structure Investment primer, which is available at https://www.ycombinator.com/documents/ and the SEC Investor Bulletin available at https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_safes.