The LEXR-Standard convertible loan (CLA / SAFE)

The Y Combinator SAFE equivalent for Germany

The fast & simple way to fundraise

Time-tested and investor approved templates

Automated & free contract generation with the LEXR Bridge

No sign-up or log-in required to create your CLA

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No more need to re-invent the wheel!
We’ve condensed years of experience negotiating convertible loans into a perfect template so that you don’t have to spend time and money creating yet another version. See for yourself, and reach out for additional advice and market insights!

Stephan Meyer, Partner @LEXR Germany | Startup Financing & VC

The Y Combinator SAFE for Germany is here

The Y Combinator SAFE set the standard for early-stage fundraising in the US. We created the German LEXR Standard convertible loan (CLA / SAFE) to simplify fundraising for German startups and investors. Powered by our document generation engine and with pre-money and post-money valuation options, you can easily adjust the convertible loan to your needs. Generate your convertible loan agreement for free – no sign-up or log-in required!

DISCLAIMER: Every situation is different. Before signing, talk to a tax and legal advisor to ensure the agreement is tailored to your needs. We do not assume any liability for your use outside of any paid engagement.

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3 simple steps to your CLA

1

Kick-off call

We jointly define a fundraising strategy and the key terms of your CLA
2

Contract drafting

Our lawyers tailor the convertible loan agreement to your needs
3

Q&A / finalization

We answer your questions, integrate feedback, and finalize your CLA

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FAQ

What is Pre-Money CLA?

This is a convertible loan with Discount and Interest that converts into equity in a future financing round. The investor gets shares at reduced price compared to new investors in the next round (Discount). The Cap Valuation and the Maturity are ‘pre-money’ – this means that the Investors get diluted by the other investors in the same CLA-Round.
What is Post-Money CLA?

This is a convertible loan with Discount and interest that converts into equity in a future funding round. The investor gets shares at a reduced price compared to new investors in the next round (Discount). The Cap Valuation and the Maturity Valuation are ‘post-money’ – this means that the investors don’t get diluted by the other investors in the same CLA-Round (i.e., they know their minimum participation upon conversion – investment amount / post-money valuation).
What is the Interest Rate?

The interest rate on a convertible loan is often lower than the market rate for similar loans. This is because the main attraction of a convertible loan is the conversion of the loan amount into shares in the company. The interest rate is usually between 1 % and 5 %, but can be waived depending on the negotiation. The key point is that the interest is usually not paid directly to the lender (with some exceptions). Instead, the interest is added to the original loan amount and this total is later converted into shares in the company.

For example, take a loan of 1.000.000 € with an interest rate of 3%. After two years, the total loan amount including non-compounding interest is 1.060.000 €. If a conversion event occurs at that time, such as a funding round, the total amount of 1.060.000 € will be converted into shares in the company. Ask ChatGPT
What is The Discount?

In addition to the interest rate, which increases the loan amount each year, the discount provides an additional incentive to investors and compensates them for the higher risk they take by investing at an early stage in the company’s history.

The discount allows the convertible lender to convert his loan into shares in the company at a lower price than the investors in the next financing round. This rewards the early investor for his early commitment and the higher risk of default that this entails. The lender receives proportionately more shares per amount invested than later investors by using a business valuation reduced by the discount.

The later an investor invests in a (successful) company, the lower the default risk and thus the lower the interest rate and the discount.
What is The Cap Valuation?

In addition to the discount, a cap valuation (also known as a conversion cap) is usually part of a convertible loan agreement. The cap valuation is the maximum company valuation at which the loan will be converted. This protects the early investors from the company being overvalued in a later financing round. The lower the cap valuation, the better for the lender/investor (and less favourable for the existing shareholders/founders), as the lender gets more shares for his money at a lower valuation.

The valuation cap ensures that an investor’s investment will not be too diluted if the company’s value rises sharply. On the other hand, a cap valuation can also have an anchor effect on future investors and financing rounds. In the case of an outstanding convertible loan with a maximum valuation of 2.000.000 €, investors in a financing round might try to bring the value of the company as close as possible to this cap valuation.

If the parties agree on both a discount and a valuation cap, as is common in the market, the discount will only be applied if the valuation of the company using the discount is less than the cap valuation. The reason for this is that the convertible lender should not benefit twice.

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