Venture Financing

SAFE

The standard 'invest now, get equity later' contract for early-stage rounds

What it is

A SAFE (Simple Agreement for Future Equity) is a short investment contract a startup uses to raise early money fast. The investor pays cash now and, instead of receiving shares immediately, gets the right to shares later when the company does its next priced equity round. Y Combinator created it in 2013, and the 2018 "post-money" version is now the standard form.

Why it matters

It is the dominant way pre-seed and seed startups raise (roughly 80-90% of recent pre-seed deals), so anyone touching early-stage startups meets it constantly. For founders the post-money SAFE makes dilution exactly calculable up front, which is both its main selling point and its main trap.

Resources

Y Combinator, SAFE documents

ycombinator.com