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A Simple Agreement for Future Equity (SAFE) lets startups raise money from investors now while delaying the complex task of setting a company valuation. It's similar to a convertible note, but simpler and without debt elements - investors give cash today in exchange for the right to get equity later, usually during the next funding round.

SAFEs became popular after Y Combinator introduced them in 2013, and they've since become a standard fundraising tool for early-stage American startups. They give founders quick access to capital without immediately diluting ownership, while investors get the potential upside of converting their investment to shares at a discount when the company raises its next round.

Use a Simple Agreement for Future Equity when your startup needs quick funding but you're not ready to set a firm valuation. This tool works especially well for early-stage companies raising their first round of capital, particularly when traditional equity rounds would be too expensive or time-consuming to structure.

SAFEs make the most sense when you need capital quickly, have strong growth potential, and expect to raise a priced equity round within 12-24 months. They're particularly valuable for tech startups and other high-growth ventures where rapid development matters more than immediate revenue. Just ensure your investors understand that their equity stake will be determined in your next funding round.

• Safe Equity Agreement: Standard post-money SAFE with a valuation cap - the most common type used by Y Combinator and similar accelerators
• Valuation Cap Only SAFE: Sets a maximum price for conversion but no discount
• Discount Only SAFE: Offers a percentage discount on the next round's price, without a valuation cap
• Most Favored Nation (MFN) SAFE: Automatically matches the best terms given to other SAFE investors
• Cap and Discount SAFE: Combines both a valuation cap and discount rate, giving investors the more favorable conversion term

• Startup Founders: Create and issue SAFEs to raise capital without immediately giving away equity or taking on debt
• Angel Investors: Provide early-stage funding in exchange for future equity rights, often investing $25,000 to $250,000
• Startup Attorneys: Draft and review SAFE agreements, ensuring legal compliance and protecting both parties' interests
• Venture Capital Firms: Sometimes use SAFEs for seed-stage investments, particularly in high-growth technology startups
• Corporate Officers: Sign and execute SAFEs on behalf of the company, managing investor relations and documentation

• Company Details: Gather your legal business name, incorporation details, and current capitalization structure
• Investment Terms: Decide on the investment amount, valuation cap, and any discount rate you'll offer
• Investor Information: Collect the investor's legal name, contact details, and accredited investor status verification
• Conversion Triggers: Define what events will trigger the SAFE's conversion into equity (usually your next priced round)
• Board Approval: Document board authorization for issuing SAFEs and confirm signature authority
• Template Selection: Use our platform to generate a legally-sound SAFE agreement that includes all required elements

• Purchase Amount: Clear statement of investment sum and payment terms
• Conversion Terms: Detailed mechanics for converting the investment into equity, including valuation cap and/or discount rate
• Equity Rights: Specific type and class of shares investors will receive upon conversion
• Trigger Events: Defined circumstances that cause automatic conversion, like equity financing or sale
• Pro-rata Rights: Investor's right to participate in future funding rounds
• DisºìÐÓÖ±²¥ Rights: How the investment is handled if the company dissolves
• Amendment Terms: Process for modifying the agreement with investor consent
• Governing Law: Statement specifying applicable state jurisdiction

A Simple Agreement for Future Equity (SAFE) differs significantly from an Equity Agreement. While both involve company ownership, they serve distinct purposes and operate differently in practice.

• Timing of Ownership: SAFEs delay equity distribution until a future event, while Equity Agreements transfer ownership immediately
• Valuation Requirements: SAFEs don't need a current company valuation, making them ideal for early-stage startups. Equity Agreements require setting a specific valuation upfront
• Legal Complexity: SAFEs are intentionally simple documents with standardized terms. Equity Agreements typically involve more complex terms, rights, and obligations
• Cost and Speed: SAFEs can be executed quickly with minimal legal costs. Equity Agreements often require extensive negotiation and legal review
• Investor Rights: SAFEs provide fewer immediate rights to investors, while Equity Agreements grant immediate shareholder privileges and voting rights