Participatory Financial Instruments are an alternative capital raising opportunity created in 2003 for joint-stock companies but extended in 2012 to limited liability companies as well, and particularly valuable for startups. Only in recent years, however, has there been more widespread discussion of them, and companies have begun to use them or consider them for their financing. The inspiration came from SAFE (Simple Agreement for Future Equity): a contract designed by the American incubator Y Combinator to raise capital in the absence of a company valuation, the logic of which can be replicated with Participatory Financial Instruments. Participatory financial instruments: what are they?

In themselves, PFIs are a hybrid financial instrument, halfway between equity and debt, which can be shaped in one direction or the other according to the needs of the company that decides to use them. A PFI is, in fact, a security that can take three different forms: Financing with an obligation to repay (bond-like). Contribution of capital or assets in exchange for future company shares (equity nature).Contribution of works or services in exchange for future company shares (work for equity). So far, it might seem that Participatory Financial Instruments are just another name for existing instruments; in reality, the overlap is only partial, but we will explore this in more detail in the following paragraphs. In particular, when we talk about PFI, we will only consider the second and third forms listed above, which are the most useful for startups or other types of young companies, leaving aside those of a bond nature. The two forms of equity-based PFI share similarities with the American SAFE contract; in fact, like the latter, they allow capital to be raised before a company is established or even on the market. SFP and SAFE compared Equity-based Participatory Financial Instruments can be defined as the Italian version of SAFE (Simple Agreement for Future Equity), created in 2009 by “Y Combinator”, the world’s most famous startup incubator. Both instruments allow capital to be raised without having to offer a valuation of the company’s value, but rather postponing this valuation to a predetermined moment in the future, when the company expects to have achieved its objectives, accumulated metrics, and defined its prospects. Compared to what is described above, our difference is that we can certify the future value of the company through sworn appraisals carried out by statutory auditors. This difference is substantial in that it allows us to guarantee a real value for assets or companies and eliminates the risk of having to wait for the future to see project objectives realized. This approach allows us to attribute the value of the appraisal to the share capital, where the value is clearly highlighted on the basis of thorough compliance and verification of all economic and financial element.