Gateway X

The GX PROFIT Agreement Pack

$500,000 at signing, with a path to another $500,000 within two years. Grow with profits. Keep the freedom to choose what comes next. A dollar of profit is infinite runway.

Non-binding key terms (PDF) Model the deal

THE DEAL IN 60 SECONDS

Four steps.
One clear path.

Start here. Understand what happens before you meet the document terms.

  1. 01

    You receive $500K at signing.

    Gateway X invests through a GX SAFE with a $5 million post-money valuation cap.

  2. 02

    You build toward revenue and income.

    You have two years to reach both milestones: $500K in trailing-three-month gross revenue and $25K in trailing-three-month GAAP net income.

  3. 03

    Both milestones require the PROFIT Investment.

    The second $500,000 is called the PROFIT Investment. If both milestones are met during the two-year window, Gateway X is required to invest. Together, the two investments are intended to result in ~20% Gateway X ownership.

  4. 04

    The path can change.

    You may raise more capital. If you close another priced round first, the current Investment Agreement ends and the SAFE follows its conversion terms.

WHAT THIS MEANS FOR YOU

Know what you get.
Know what you keep.

Capital
$500K at signing, with a possible second $500K, called the PROFIT Investment, within two years.
Ownership
After both investments, Gateway X is intended to own ~20% on a fully diluted, post-financing basis.
Control
Gateway X begins as a non-voting board observer. A board seat is triggered only if a non-founder director is added.
Team
A talent pool helps you recruit and retain your team. The calculator illustrates 10%; the templates leave the actual pool and share counts to be completed for the round.
Profits
The board decides whether to declare dividends. The documents do not require distributions.
Future rounds
You may raise again. Another priced round ends the current Investment Agreement and changes the path.

THE FUNDING MODEL

Two investments.
One clear path.

The first $500,000 arrives through a GX SAFE with a $5 million post-money valuation cap. The second $500,000, called the PROFIT Investment, may follow within two years at a $5 million post-money valuation.

01 At signing

First Gateway X investment

$500K

Invested at signing through a GX SAFE with a $5 million post-money valuation cap.

Business milestones, not funding

Both conditions make the PROFIT Investment required

Both must be achieved within two years. Gateway X and the company's board determine together, in good faith, whether they have been met.

Revenue milestone $500K Trailing 3-month gross revenue
AND
Income milestone $25K Trailing 3-month GAAP net income

Revenue means customer revenue recognized under GAAP, with the agreement's exclusions, not money raised. See what counts.

02 Within 2 years

PROFIT Investment

$500K

If completed, this $500K purchases Series PROFIT Preferred Stock at a $5 million post-money valuation and the GX SAFE converts.

Gateway X can invest

We may make the PROFIT Investment at any time during the two-year window, even before the milestones are met.

Gateway X will invest

The Gateway X PROFIT Commitment requires us to make the PROFIT Investment if both milestones are met within the two-year window.

THE RESULT

$1M total

The two investments are intended to result in Gateway X owning ~20% on a fully diluted, post-financing basis.

Profit gives you options.
Options give you freedom.

Seedstrapping is a third path: enough early capital to build, with revenue and profit taking over from fundraising.

The PROFIT Agreement gives you a clear path to a second check and preferred-stock terms designed around profitable growth.

RIGHTS EXPLAINED

What each right
actually does.

Start with the practical meaning. The formal legal name is secondary. These examples are simplified and are not legal advice.

Gateway X has two ways to invest more.

Gateway X PROFIT Commitment and pro rata right

Gateway X may make the PROFIT Investment within two years. Before the first priced round, it may also buy its share of other capital-raising securities.

When this applies The current pro rata right ends at the first priced round, before a sale, or before dissolution.

A qualifying better term may carry back.

Most Favored Nation, or MFN

If a later SAFE or qualifying convertible offers materially better rights overall, Gateway X may ask to amend its SAFE to receive substantially equivalent rights.

In practice The company notifies Gateway X. Gateway X must then make the prompt written request described in the agreement.

Gateway X gets visibility without a vote.

Board observer, information, and notice rights

Gateway X may attend board meetings and receive specified company information without voting as a director. The company also reports the major events listed in the agreement.

Limits Executive sessions and specified privilege, confidentiality, and conflict situations are excluded.

A non-founder director triggers a Gateway X seat.

Board seat right

If the board adds any non-founder director, Gateway X may appoint one voting director instead of remaining an observer.

In practice Gateway X does not receive a voting board seat at signing.

The board decides whether to pay dividends.

Dividend participation

The documents do not require profit distributions. While the SAFE is outstanding, a dividend paid on common shares, other than one paid in common shares, also triggers a payment to Gateway X under the SAFE's formula.

Boundary This right is in the SAFE, not a separate dividend clause in the latest Investment Agreement. It is not a fixed 20% payment.

The SAFE explains a sale before conversion.

Liquidity event

If the company is sold before the SAFE converts, Gateway X receives the greater of its purchase amount or its as-converted value, subject to the SAFE's payment order.

Boundary This explains the comparison in the SAFE. It does not predict the result of a specific sale.

The actual documents.
By investment stage.

Read the templates for both investments. Start with the GX SAFE and Investment Agreement, then review the PROFIT Agreement and Charter for the second investment and priced round.

Word templates for review, not signed agreements. Company details, share counts, and applicable options must be completed. Seek your own legal advice before using them.

TRANCHE 1 · AT SIGNING

The first $500K investment

The SAFE funds the company. The Investment Agreement sets the second-investment commitment and interim rights.

01

GX SAFE

Word template · DOCX

Funds the first $500,000 and explains conversion, dividends, a sale, and dissolution. The purchase amount is a blank in the template; the Investment Agreement specifies $500,000.

Download template: GX SAFE (Word document)

TRANCHE 2 · PRICED ROUND

The $500K PROFIT Investment

The SAFE converts and the second investment buys preferred shares. These two documents work together for that closing.

These download copies have tracked changes accepted. Template blanks, optional language, and drafting notes remain. Read the Agreement and Charter together. The signed and completed documents control, not this explanation.

Prefer the plain-language overview?

The key-terms PDF summarizes both stages. It is non-binding and does not replace the actual agreements.

Know the words.
Know the deal.

Use this reference when a legal or financial term appears in the documents.

Each definition includes an optional practical example. Examples are simplified and are not legal advice.

Open the full glossary12 terms
Post-money valuation cap
The company value used to calculate the SAFE's conversion price. The GX SAFE uses a $5 million cap.
Trailing three months
A rolling total for the company's most recent three months.
Gross revenue
Customer revenue recognized under GAAP before product costs and operating expenses, after the exclusions in the Investment Agreement.
GAAP net income
The net-income measure named in the Investment Agreement. The milestone is $25K over the latest three months.
SAFE conversion
The SAFE becomes preferred shares when a priced financing closes under the SAFE's terms.
Fully diluted ownership
An ownership view that counts current shares and the rights that could become shares.
Pro rata right
A right, not an obligation, to buy a share of a future issuance. Each stage has its own rules.
Most Favored Nation, or MFN
If a later SAFE or qualifying convertible offers materially better rights overall, Gateway X may ask for substantially equivalent rights in its SAFE.
Board observer
A non-voting role that lets Gateway X attend board meetings and receive materials while the Investment Agreement applies.
Liquidity event
The SAFE's name for a sale, direct listing, or initial public offering covered by its terms.
1x liquidation preference
In the Charter, preferred shares receive the greater of their original price plus declared but unpaid dividends, or what they would receive as common shares.
Protective provisions
In the Charter, specified major actions need approval from holders of a majority of preferred shares, voting as if converted, while the stated share threshold is met.

This glossary explains the documents in everyday language. It is not legal, tax, accounting, or investment advice. Signed documents control.

The fine print.
In plain English.

Everything above, organized by the document and closing stage where it lives.

This is a plain-language explanation, not legal, tax, accounting, or investment advice. Signed documents control.

First close$500K
PROFIT Investment$500K
Post-money valuation$5M
Intended Gateway X ownership~20%

Open a stage to see the terms that live there.

01In the GX SAFE, at first close
  • $500,000 initial investment: Gateway X purchases a GX SAFE.
  • $5 million post-money valuation cap: The cap helps determine the SAFE's conversion price.
  • Priced financing: The SAFE converts into preferred shares under the SAFE's formula.
  • Sale before conversion: Gateway X receives the greater of its purchase amount or its as-converted value, subject to the SAFE's payment order.
  • No stockholder vote yet: Holding the SAFE alone does not make Gateway X a voting stockholder.
  • Dividends before conversion: If the company pays a dividend on common shares other than in common shares, it pays Gateway X the SAFE's calculated Dividend Amount at the same time. This is not a fixed 20% of distributions.
02In the Gateway X Investment Agreement, at first close
  • Gateway X PROFIT Commitment: Gateway X may make the $500,000 PROFIT Investment within two years. It is required to invest if the company reaches both $500,000 in trailing-three-month gross revenue and $25,000 in trailing-three-month GAAP net income within that window.
  • Pro rata right: Before the first priced round, Gateway X may buy its share of capital-raising securities. The current right ends at that round, before a sale, or before dissolution.
  • Revenue definition: Count customer revenue recognized under GAAP, with the exclusions explained in the milestone FAQ below. The investment itself does not count as revenue.
  • Better qualifying convertible terms: If the overall later package is materially more favorable, Gateway X may promptly request substantially equivalent rights in its SAFE. The documents call this an MFN right.
  • Company information: While the agreement applies, Gateway X receives at least quarterly financial statements and an annual operating budget.
  • Board visibility: Gateway X starts as a non-voting observer, subject to the agreement's limits. A non-founder director triggers Gateway X's right to appoint one voting director instead.
  • Major event notices: The company reports the specified major technical, regulatory, legal, security, and financial events, subject to the agreement's stated limit.
  • Good-faith commitments: The company confirms the profitable-growth vision and in-person participation in the next 12-week St. Louis Fellowship.

Another priced financing or a sale ends this Investment Agreement. The SAFE then follows its own terms. Gateway X and the company's board determine milestone achievement together in good faith. The agreement does not specify detailed evidence, notice, dispute, or closing procedures.

03In the PROFIT Agreement and Charter, at the priced round
  • PROFIT Investment: Gateway X intends to invest $500,000 in Series PROFIT Preferred Stock at a $5 million post-money valuation.
  • ~20% ownership: The two GX investments are intended to result in ~20% Gateway X ownership on a fully diluted, post-financing basis.
  • Talent pool: The templates do not set a fixed pool percentage. The calculator uses 10% as an illustration; the round's completed capitalization sets the actual pool.
  • Sale economics: Preferred holders receive the greater of their original share price plus declared but unpaid dividends, or the value of those shares as common stock, subject to available proceeds. Already-paid dividends do not reduce the original-price amount in this Charter.
  • Dividends: A common-share dividend must include preferred shares on an as-converted basis. Preferred dividends are paid only when the board declares them from legally available funds. They do not accrue if none is declared.
  • Share conversion and lower-price financing: Preferred shares can convert to common shares. A qualifying later issuance at a lower price adjusts the conversion price using a weighted-average formula, with listed exceptions.
  • Voting: Preferred shares generally vote alongside common shares as if converted.
  • Major actions: While at least 50% of the Series Profit Preferred shares issued on their original issue date remain outstanding, the Charter requires approval from holders of a majority of outstanding preferred shares, voting together as if converted, for these actions:
    • Amend its charter or bylaws.
    • Create or issue a security senior to or on parity with Series PROFIT Preferred Stock.
    • Redeem or repurchase stock, except unvested stock repurchased at cost from a departing service provider.
    • Declare or pay a dividend outside the agreed terms.
    • Sell the company or substantially all its assets, liquidate, dissolve, or complete an acquihire.
    • Create, assume, or guarantee borrowed-money debt exceeding $100,000 outstanding at any one time.
    • Change the size of the board.
  • Later investment and information rights: The PROFIT Agreement gives qualifying major investors, including Gateway X, a separate future-investment right, with exceptions. It also provides financial reports on written request and limited inspection rights.
  • Later board rights: Gateway X has observer rights while it holds at least 25% of the shares it received under the PROFIT Agreement. At that threshold, a director outside the listed founder group triggers a right to designate a director.
  • Share transfers and sales: The PROFIT Agreement includes first-buy and co-sale rights for specified founder transfers. Its sale-support rule requires approval from the board, a majority of non-converted common shares, and a majority of preferred shares, subject to its conditions.

These Series PROFIT Agreements are templates for the later closing, not rights that apply at first signing. Download the PROFIT Agreement and Charter above for the full terms, options, and exceptions. The completed and signed documents control.

WHAT WE ASK OF EACH OTHER

A simple commitment
to each other.

01

You

  • Share the vision of building a profitable business with minimal seed capital.
  • Participate in person in the next 12-week Gateway X Fellowship in St. Louis.

The Investment Agreement records these as good-faith company commitments.

02

Gateway X

  • Invest $500,000 through the GX SAFE at signing.
  • Keep the right to make the $500,000 PROFIT Investment within two years.
  • Make the PROFIT Investment if both milestones are reached within that window.

The signed documents set the investment terms and timing.

QUESTIONS FOUNDERS ASK

Clear answers.
No runaround.

The basics are worth repeating. Signed documents control the details.

Funding + milestones

01How much does Gateway X invest, and what does it own?

Gateway X invests $500,000 through a GX SAFE at signing. It may make a second $500,000 investment, called the PROFIT Investment, within two years. If both investments close, they are intended to result in Gateway X owning ~20% on a fully diluted, post-financing basis.

02When will Gateway X make the PROFIT Investment?

Gateway X may invest the second $500,000 at any time within two years after the SAFE date. It is required to invest if the company reaches both $500,000 in trailing-three-month gross revenue and $25,000 in trailing-three-month GAAP net income within that window. Gateway X and the company's board determine together, in good faith, whether both milestones have been met. One milestone alone is not enough.

03What if we miss the milestones or reach them after two years?

If the two-year window ends before both milestones are reached, the Gateway X PROFIT Commitment does not require Gateway X to make the PROFIT Investment. The GX SAFE remains subject to its own conversion, sale, and dissolution terms.

04What numbers count toward the milestones?

Both measures use the latest three months. Gross revenue starts with customer revenue recognized under GAAP, before product costs and operating expenses. It excludes invoices unpaid more than 90 days after their due date and amounts written off as uncollectible.

It also excludes money raised from equity, debt, loans, or grants; interest and investment income; taxes collected for a government; and founder, director, or affiliate payments unless made on arm's-length terms. Refunds, returns, and chargebacks reduce revenue in the period they occur.

The second test is $25,000 in GAAP net income, not cash in the bank. Gateway X and the company's board determine milestone achievement together in good faith.

05What does the $5 million post-money valuation mean here?

The GX SAFE uses a $5 million post-money valuation cap to help calculate its conversion price. The $500,000 PROFIT Investment is also set at a $5 million post-money valuation. Actual ownership depends on the capitalization, and the combined result is intended to be ~20% for Gateway X.

06What if we want to raise more money?

You may raise more money. If you close another priced equity financing before the PROFIT Investment, the current Investment Agreement ends, including the Gateway X PROFIT Commitment and interim rights. The GX SAFE then converts under its own terms.

Ownership + control

07Does PROFIT mean we have to share operating profit or pay dividends?

No. The documents do not require the board to declare dividends. Before conversion, a qualifying dividend paid on common shares triggers a payment under the SAFE's formula. After the PROFIT round, the Charter provides for preferred holders to share in common-share dividends as if converted. Neither is a promise of regular payouts.

08Will Gateway X control my company?

Gateway X starts as a non-voting board observer, subject to meeting and information limits. If the board expands to add a non-founder director, Gateway X may appoint one voting director instead. The priced-round templates have separate board rights and preferred-holder approvals for listed major decisions. They do not give Gateway X day-to-day operating control.

09What am I committing to as a founder?

The company confirms in good faith that it shares Gateway X's vision of building a profitable business with minimal seed capital and will participate in person in the next 12-week Fellowship in St. Louis.

10What company type do the standard documents assume?

These templates are for a corporation; the priced-round forms use a Delaware corporation. This download set does not include an LLC version or an LLC conversion process.

11What rights come with Series PROFIT Preferred Stock?

The Charter sets sale, dividend, conversion, lower-price financing, voting, and major-decision rights. The PROFIT Agreement covers the purchase and investor rights, including later investment, information, board, and transfer rights. Both are available in the document downloads.

12Why does the deal include an employee pool?

A pool sets aside equity to help recruit and retain the people your company needs. The calculator uses a 10% reserve as an illustration, not a percentage fixed by these templates. The completed round documents and capitalization determine the actual pool and its effect on ownership.

Documents + decisions

13What happens if the company is sold before the PROFIT Investment?

The Investment Agreement ends at a sale covered by the documents. If the GX SAFE has not converted, the SAFE says Gateway X receives the greater of its purchase amount or its as-converted value, subject to the SAFE's payment order.

14Which documents can I download?

All four Word templates are available: the GX SAFE and Gateway X Investment Agreement for tranche 1, plus the PROFIT Agreement and Charter for tranche 2 and the priced round. The download copies have tracked changes accepted and retain the template blanks and drafting notes. The key-terms PDF is a separate, non-binding explanation.

15Is this page a substitute for the signed documents?

No. This page explains the mechanics in plain language. It is not legal, tax, accounting, or investment advice. Signed documents control.

Read the terms.
Then get back to building.

Review the templates for both investments, or start with the plain-language key terms.

Non-binding key terms (PDF)

This page is a plain-language explanation, not legal, tax, accounting, or investment advice. Signed documents control.