Startup Financing: When Is A SAFE Not So Safe?

Startups have been raising money using the Simple Agreement for Future Equity (SAFE) since it was first introduced by Y Combinator in 2013. The advent of the SAFE has fundamentally changed the speed and simplicity of early-stage fundraising for the better. The SAFE has evolved since its introduction, and today a startup can choose one of the forms of SAFE directly from the Y Combinator website, fill in some basic information (investor name and amount), have an investor sign it and be funded. It's (almost) that simple!

Yet despite the simplification provided by the SAFE, over the past few years we have seen an increase in additional terms creeping into the SAFE and being presented as part of the "standard" form; in many instances through a side letter. Some startups, desiring to move fast and accept what they believe to be industry-standard terms, do not realize that these additional terms sometimes give investors significant advantages or rights that the investor