KISS, or Keep it Simple Security, are simple funding documents that were originally released by 500 Startups.
KISS, or Keep it Simple Security, are simple funding documents that were originally released by 500 Startups. This was done after the feedback from a lot of early-stage investors on how they were paid back for investing in companies. KISS was designed to be highly simple, balanced, flexible for both parties (companies and investors).
There are two kinds of agreements in KISS, one for equity and one for debt. In the debt version of KISS, it offers a maturity date of about 18 months, has an interest rate of about 5%, and converts to preferred stock only if the company is able to raise $1M in the next qualified funding round.
On the other hand, while KISS equity securities also have a maturity date of 18 months, they automatically convert to equity when the company raises $1M funding in the next funding round. Also, this agreement does not have any interest rate, making it highly attractive to founders.
Even though a KISS is something that was made to be easy and clear to understand, it is still better for the company to contact a lawyer to have things checked over when dealing with investors. Also, do remember to keep updating your cap table while you give out shares.
To know more about KISS, Eqvista can help you. Eqvista also offers a cap table application that can keep you on top of all dealings and up to date.