SAFE

A Simple Agreement for Future Equity (SAFE) is an investment instrument created by Y Combinator that provides investors with the right to receive equity in a future priced round, without the complexity of a convertible note. Unlike convertible notes, SAFEs have no interest rate, maturity date, or repayment obligation. SAFEs convert into preferred stock upon a qualifying financing event and include terms such as a valuation cap and/or discount. They have become the most common instrument for early-stage startup fundraising.