What is SAFE Agreement? Definition, requirements, and how it applies to your business formation. Learn everything about simple agreement for future equity for LLCs and corporations.
# Simple Agreement for Future Equity
A SAFE (Simple Agreement for Future Equity) is an investment instrument created by Y Combinator that allows investors to provide capital to a startup in exchange for the right to receive equity in a future priced round. Unlike convertible notes, SAFEs have no interest rate, no maturity date, and no repayment obligation.
SAFEs are the dominant early-stage investment instrument in Silicon Valley. They come in four standard variants: pre-money valuation cap, post-money valuation cap, discount only, and MFN (most favored nation). The post-money SAFE is now the most common.
Lovie's formation-to-fundraising workflow includes SAFE template generation and cap table modeling to show founders exactly how SAFE conversions will dilute their ownership.