Simple agreement for future equity,
Definition of Simple agreement for future equity:
Commonly referred to as a SAFE, a simple agreement for future equity is a simple contract between an investor and a startup company where the investor provides capital to the startup company, and the startup provides a warrant to issue stock to the investor at a later time.
SAFEs are one common instrument used in angel investing as a method to reduce legal costs and overhead in investing in startups. Angel investors use these low-cost instruments in ultra-high risk startup investing because they expect most of their startup investments to fail. As a practical matter, most startups that do fail have little or no assets of value to take advantage of after their failure. SAFE vs Convertible Note
Convertible Notes are debt instruments backed by the equity of the company. SAFEs typically have an option to acquire equity in various conditions, but are not a debt instrument and there is no maturity date.
Meaning of Simple agreement for future equity & Simple agreement for future equity Definition