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What is a safe investment?

SAFEs let investors convert their cash investments into equity when specified events occur, often at a discount or a maximum value. Key benefits include simplicity, customizable terms, aligning investor and startup success, and lowering the potential for diluting founders’ stakes.

What is a safe investor?

The SAFE investor receives the future shares when a priced round of investment or liquidity event occurs. SAFEs are intended to provide a simpler mechanism for startups to seek initial funding other than convertible notes. [ 1][ 2] The precise conditions of a SAFE vary.

What makes a safe investment instrument?

This simplicity is the primary motivation of a SAFE. "Safes should work just like convertible notes, but with fewer complications", according to startup accelerator Y Combinator . Y Combinator released the Simple Agreement for Future Equity ("SAFE") investment instrument as an alternative to convertible debt in late 2013. [ 4]

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