A short, founder-friendly contract (Simple Agreement for Future Equity) where an investor wires money now in exchange for shares at the next priced round, with no interest, no maturity date, and no debt to pay back.
Carolynn Levy at Y Combinator drafted the original SAFE in late 2013. Convertible notes had become the de facto seed instrument but carried baggage — interest, maturity dates, the threat of insolvency if the next round didn't close. The SAFE stripped all of that out: five pages, no debt, converts at the next priced round. Within a few years it became the global default.
Both let an early investor wire money before a priced round. SAFE is YC's 2013 simplification of the older convertible note, and the differences are sharper than they look at first glance.
| Aspect | SAFE | Convertible Note |
|---|---|---|
| Maturity date | None | 12 to 24 months, then it's owed back |
| Interest accrued | None | 4 to 8% annually |
| If it never converts | Cap table footnote | Outstanding debt the company owes |
| Founder negotiation surface | Just cap and discount | Cap, discount, interest rate, and term |
| Era of choice | Post-2014 US default | Pre-2014 US default |
