SAFE (Simple Agreement for Future Equity)
An early-stage funding document where an investor gives you money now in exchange for equity later, once you raise a priced round — without setting a valuation today.
Quick Answer
How does a SAFE actually convert into equity?
It converts automatically at your next priced round, using the lower of its valuation cap or a discount to the round price — whichever gives the investor more favorable terms based on the SAFE's specific wording.
- The cap is a ceiling, never a floor
- A round priced below the cap converts at the round price instead
- Multiple stacked SAFEs can each convert at different effective prices
The Lovie Advantage
Lovie converts every outstanding SAFE against your actual round terms at once, instead of calculating each one by hand.
See how this connects to Dilution. For the formal definition, see Investor.gov's glossary entry on convertible securities.
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