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SAFE definition: Copy, customize, and use instantly

Introduction

The term "SAFE" refers to a financial agreement that enables investors to fund a company in exchange for the right to convert that investment into equity at a later date, usually during a subsequent financing round. It is essential for early-stage companies to raise funds without setting a precise valuation at the time of investment.

Below are various examples of how "SAFE" can be defined in different contexts. Copy the one that fits your needs, customize it, and use it in your contract.

Definition of "SAFE" as a standard investment agreement

This definition ties "SAFE" to its traditional use in venture capital financing.

"SAFE" means a Simple Agreement for Future Equity, a financing instrument where investors provide capital to a startup in exchange for the right to convert that capital into equity at a future date, typically at a valuation discount or with a cap.

Definition of "SAFE" as a seed funding tool

This definition connects "SAFE" to early-stage investment needs.

"SAFE" refers to a type of seed funding instrument that allows investors to fund a startup, receiving the right to equity conversion in a later financing round without establishing an immediate valuation.

Definition of "SAFE" as a convertible agreement

This definition links "SAFE" to convertible securities.

"SAFE" means a convertible agreement under which the investor's funds are converted into equity during a future financing round, with terms often including a valuation cap or discount to the subsequent funding round's valuation.

Definition of "SAFE" as a mechanism for deferring valuation

This definition applies "SAFE" to the deferral of company valuation.

"SAFE" refers to an agreement used by startups to raise capital without having to determine a valuation at the time of the investment, deferring this process to a later financing event.

Definition of "SAFE" as a post-money agreement

This definition ties "SAFE" to post-money valuation calculations.

"SAFE" means a post-money Simple Agreement for Future Equity, where the valuation cap and discount are applied based on the post-money valuation of the startup after the funding round.

Definition of "SAFE" as a pre-money agreement

This definition connects "SAFE" to pre-money valuation structures.

"SAFE" refers to a pre-money Simple Agreement for Future Equity, where the valuation cap and discount apply based on the valuation of the startup before the funding round, ensuring a more favorable conversion for early investors.

Definition of "SAFE" as a bridge financing tool

This definition links "SAFE" to bridging funding.

"SAFE" means a tool used by startups to raise bridge financing from investors, with the funds converting into equity during a subsequent financing round, typically with no interest or maturity date.

Definition of "SAFE" as a no-interest, no-maturity instrument

This definition applies "SAFE" to its no-interest, no-maturity features.

"SAFE" refers to an investment instrument that does not accrue interest and has no maturity date, converting into equity when a qualified financing round takes place.

Definition of "SAFE" as an equity conversion right

This definition ties "SAFE" to the right to convert to equity.

"SAFE" means an agreement that grants investors the right to convert their investment into equity at a future date, typically during a qualified financing event or upon other triggering events, such as an acquisition.

Definition of "SAFE" as a term sheet alternative

This definition connects "SAFE" to venture capital term sheets.

"SAFE" refers to an alternative to traditional term sheets used in early-stage funding, simplifying the process by avoiding valuation negotiations and complex legal provisions.

Definition of "SAFE" as a non-dilutive funding mechanism

This definition links "SAFE" to non-dilution characteristics.

"SAFE" means a funding agreement designed to provide capital to early-stage companies without immediate dilution of existing shareholders’ equity, as conversion into equity happens in later rounds.

Definition of "SAFE" as a tool for international investors

This definition applies "SAFE" to cross-border funding.

"SAFE" refers to a flexible investment tool used by international investors to invest in startups, with terms tailored to comply with both local and international regulations for equity conversion.

Definition of "SAFE" as a flexible startup financing tool

This definition connects "SAFE" to its flexibility.

"SAFE" means a flexible financing tool that allows startups to raise capital from investors without complex negotiation over valuation or ownership percentages at the outset.

Definition of "SAFE" as a capital raising instrument for high-risk ventures

This definition links "SAFE" to high-risk startups.

"SAFE" refers to a capital raising instrument designed for high-risk startups, allowing them to secure funding from investors without immediate equity dilution or valuation concerns.

Definition of "SAFE" as a capped investment agreement

This definition applies "SAFE" to its capped feature.

"SAFE" means an investment agreement where the amount of equity an investor will receive upon conversion is capped at a certain valuation, ensuring favorable terms for early investors.

Definition of "SAFE" as an instrument for valuation uncapped deals

This definition connects "SAFE" to uncapped deals.

"SAFE" refers to an agreement where the investor’s equity conversion is uncapped, meaning there is no maximum valuation for the equity conversion upon a future financing event.

Definition of "SAFE" as a tool for early-stage venture capital

This definition ties "SAFE" to venture capital at the seed stage.

"SAFE" means an instrument widely used in early-stage venture capital, providing startups with a way to raise funds without formal equity valuation or complex negotiations at the time of investment.

Definition of "SAFE" as a convertible note alternative

This definition links "SAFE" to convertible notes.

"SAFE" refers to an alternative to convertible notes in startup financing, with the key difference being the absence of interest accrual or a fixed maturity date for repayment.

Definition of "SAFE" as an investment agreement with automatic conversion

This definition applies "SAFE" to automatic equity conversion.

"SAFE" means a simple agreement where the investor's funds automatically convert into equity at a future financing event, with the terms pre-determined and without the need for further negotiation.

Definition of "SAFE" as a tool for reducing legal complexity in financing

This definition connects "SAFE" to legal simplicity.

"SAFE" refers to an investment tool that simplifies the legal complexities involved in early-stage financing, offering a straightforward agreement with fewer legal formalities compared to traditional equity funding.

Definition of "SAFE" as a funding solution for product development

This definition ties "SAFE" to product development needs.

"SAFE" means an agreement used by startups to raise funds specifically for product development, with the investor receiving equity in the company once it achieves a future financing round.

Definition of "SAFE" as an instrument with a liquidation preference

This definition connects "SAFE" to liquidation preferences.

"SAFE" refers to an investment agreement where the investor’s equity conversion comes with a liquidation preference, ensuring they are paid before common equity holders in case of a liquidation event.

Definition of "SAFE" as a mechanism for fundraising without board approval

This definition links "SAFE" to startup governance.

"SAFE" means a fundraising instrument that allows startups to raise capital without needing board approval, simplifying the process of securing investment from early-stage investors.

Definition of "SAFE" as a financing instrument for technology startups

This definition ties "SAFE" to technology startups.

"SAFE" refers to a financing instrument commonly used by technology startups to raise funds from early investors without diluting ownership or requiring complex valuation negotiations.

Definition of "SAFE" as a simple tool for deferred valuation negotiation

This definition connects "SAFE" to valuation deferral.

"SAFE" means a financing tool that defers the need to negotiate a company’s valuation until a later funding round, allowing both the investor and startup to avoid lengthy negotiations during early-stage funding.

Definition of "SAFE" as a flexible alternative to equity financing

This definition links "SAFE" to alternatives to equity.

"SAFE" refers to a flexible alternative to traditional equity financing, where investors provide funds with the expectation that they will convert to equity at a future date without impacting the company's current valuation.