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Glossary · Fundraising

SAFE note

Also called SAFE, simple agreement for future equity

Definition

A SAFE (simple agreement for future equity) is an early-stage funding instrument created by Y Combinator. The investor pays now and receives shares later, usually at the next priced round, often with a valuation cap or discount. Unlike a convertible note, it is not a loan and carries no interest.

Where SAFE note comes up

On this site, in our guides and in the conversations we've written up.

Video · New Ventures BC Startup fundraising: what investors check and what goes in the data room Seed is a big step up, because issuing priced shares brings heavier paperwork: $20,000 to $40,000 in legal costs, against roughly $2,000 to $6,000 for a SAFE round (around 2:39:03).

Related terms

Convertible note A loan to a startup that converts into shares at a later funding round instead of being repaid. Cap table The table showing who owns what in a company: shares, options and convertibles. Term sheet A short, mostly non-binding summary of the key terms of an investment or deal.
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