SAFE (Simple Agreement for Future Equity)

A SAFE (Simple Agreement for Future Equity) is an investment tool used by startups to raise money. Instead of giving upfront equity, investors provide funds now with the agreement that, later, they will receive equity (ownership) in the company during its next financing round. The SAFE isn't a loan and doesn’t accrue interest—it acts as a promise for future shares, often with specific terms like valuation caps or discounts to determine how much equity the investor gets. It's a straightforward way for startups to secure early funding without complicated negotiations.