What is SAFE (Simple Agreement for Future Equity)?

Fundraising

SAFE (Simple Agreement for Future Equity)

Quick definition

Convertible instrument commonly used for early-stage rounds.

A SAFE is a contract giving an investor the right to future equity in exchange for cash now — no interest, no maturity date. Created by Y Combinator. Common variants: post-money SAFE (simpler cap table math) and pre-money SAFE. Converts to preferred stock at the next priced round.

Related fundraising terms

Convertible Note
Debt that converts to equity at the next priced round.
409A Valuation
Independent valuation of common stock used to set option strike prices.
Cap Table
A record of all ownership interests in your company.
Pro Rata Right
An investor's right to maintain their ownership % in future rounds.

See this in action

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