SAFE (Simple Agreement for Future Equity)

A SAFE lets an investor provide capital now in exchange for the right to receive equity later, when the company raises a priced round — without negotiating a valuation at the time of the SAFE itself. It typically includes a valuation cap, a discount rate, or both, which determine the conversion price.

Unlike a convertible note, a SAFE isn't debt — it doesn't accrue interest and doesn't have a maturity date, which is part of why it became the standard instrument for early-stage rounds after YCombinator introduced it.