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ARTICLE · 11 DECEMBER 2024

Not-So-Simple Agreements For Future Equity

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Simple agreements for future equity ("SAFEs") are becoming a common way for startups and high-growth companies to raise funds.

GlobalCorporate/Commercial Law
Kyle Mirecki
Kyle Mirecki
Mark Mielke
Mark Mielke
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Simple agreements for future equity ("SAFEs") are becoming a common way for startups and high-growth companies to raise funds.

However, don't let the name fool you. While SAFEs may be intended to be a simple and quick way to bring money in the door, the terms of SAFEs are much more complex and tend to kick a number of uncertain terms down the road (so to speak).

Small modifications to the terms of a SAFE can have a big impact on a company's capitalization table, dilution of founder shares and an investor's bottom line. For this reason, you should always consult with your own legal advisors when considering issuing or purchasing a SAFE.

What is a SAFE?

A SAFE is an agreement between an investor and a company whereby the investor agrees to give the company funds for the right to either:

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