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
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.
Pre-money SAFE
Original SAFE form (2013) that converts based on the company's valuation cap before the new round, diluting only existing holders.
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Insights and tools where SAFE (Simple Agreement for Future Equity) shows up.
Frequently asked questions
- What is SAFE (Simple Agreement for Future Equity)?
- 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.
- Why is SAFE (Simple Agreement for Future Equity) important for startups?
- SAFE (Simple Agreement for Future Equity) is a fundraising concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does SAFE (Simple Agreement for Future Equity) belong to?
- SAFE (Simple Agreement for Future Equity) is a Fundraising term in the StartupCFO finance glossary — alongside other fundraising concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about SAFE (Simple Agreement for Future Equity)?
- Beyond this definition, see the related fundraising terms below, or explore StartupCFO's insights and tools that put SAFE (Simple Agreement for Future Equity) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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