Simple Agreement for Future Equity (SAFE)

A simple agreement for future equity (SAFE) is a type of investment agreement that is commonly used in the startup ecosystem. A SAFE is a contract between an investor and a company that gives the investor the right to receive equity in the company at some point in the future, typically in connection with a future financing round. Unlike a traditional convertible note, which is a debt instrument that converts into equity at a future date, a SAFE is not a loan and does not accrue interest or have a maturity date. Instead, a SAFE is a simple and flexible way for a startup to raise capital from investors without having to issue shares of common stock upfront.