What You Should Know About Safes

When early stage founders are looking to raise money, they are often choosing between using Simple Agreements for Future Equity (SAFEs) or convertible notes. Our clients often ask what the difference is between the two and, though they are similar in some respects, SAFEs have some distinctive characteristics that you should be aware of. Key features of SAFEs are discussed below, and for a primer on convertible notes please check out this article.

A SAFE is an investment instrument that converts the holder's value into equity of the issuer upon certain triggering events. As the name suggests, SAFEs were designed to be simpler, more streamlined, and an easier way for founders and investors to align quickly on an investment. Like convertible notes, SAFEs are popular in early-stage financings because they allow companies to raise money and investors to invest money without having to value the company before either party knows how much the company it is worth. Like