A SAFE (Simple Agreement for Future Equity) is a financial instrument commonly used by startups to raise capital. It's an agreement between a company and an investor that provides the right for the investor to receive equity in the company at a future date, typically when a priced round of investment occurs.
SAFEs offer several advantages:
However, they also come with potential complexities, especially when converting to equity. This calculator helps illustrate various scenarios involving SAFEs and traditional equity investments.
The SAFE was introduced by Y Combinator in late 2013 as an alternative to convertible notes. Key milestones in SAFE history include:
Since its introduction, the SAFE has become a popular fundraising tool, particularly for early-stage startups in accelerator programs and seed rounds. Its evolution continues as the startup ecosystem adapts to changing market conditions and investor preferences.
The equity percentages shown are before any potential dilution from future funding rounds or option pools. Actual ownership may change over time as the company raises more capital or issues additional shares.