SAFE
MarketsDefinition
Simple Agreement for Future Equity. A standard early-stage VC instrument created by Y Combinator (2013). Converts to preferred stock at the next priced round at a discount or valuation cap. Not debt — no interest, no maturity.
Pros: simple, founder-friendly, no interest. Cons: founders can over-issue SAFEs and create unexpected dilution at the priced round; non-priced SAFEs make cap tables harder to manage.
Pros: simple, founder-friendly, no interest. Cons: founders can over-issue SAFEs and create unexpected dilution at the priced round; non-priced SAFEs make cap tables harder to manage.