SAFE (Simple Agreement for Future Equity)

The Simple Agreement for Future Equity is a financial instrument created by Y Combinator to simplify seed investing as an alternative to convertible notes. A SAFE is similar to a convertible note. SAFEs, however, do not come with an interest rate or maturity date and are not a loan.

SAFEs also allow for high resolution funding and flexibility with key terms such as the valuation cap and discount rate without the legal costs and negotiations typically associated with a more traditional priced round.