Last updated: 2025-10-08
A SAFE (Simple Agreement for Future Equity) is a way for investors to give you money now in exchange for equity later. Think of it as an IOU that converts to actual ownership when you raise your next round.
Unlike a loan, a SAFE doesn't have interest rates or a maturity date. It's simpler than a convertible note because there's no debt involved. The investor gives you money, and you promise to give them equity when you raise your next priced round (like Series A).
Example
An investor gives you €100K on a SAFE with a €5M valuation cap. When you raise Series A at a €10M valuation, they convert at the €5M cap (better price for them). If you raise at €3M, they convert at €3M (the actual price).
The maximum valuation at which the SAFE converts to equity. This protects early investors by giving them a better price if your company grows quickly.
Example: If you raise €100K with a €5M cap, and later raise Series A at €10M valuation, the SAFE investor converts as if the company was worth €5M (they get twice as much equity).
Typical pre-seed ranges: €2M-€8M depending on traction and market.
A percentage reduction on the price per share in your next round. This rewards early investors for taking risk.
Example: With a 20% discount, if Series A shares cost €1.00, SAFE investors pay €0.80 per share (20% off).
Common range: 10-20%. Higher discounts compensate for higher risk.
A clause that says if you give better terms to later investors, those improvements automatically apply to earlier SAFE holders.
Example: You raise €50K with a €8M cap. Later, you raise €200K with a €6M cap. MFN means the first investor's cap drops to €6M too.
Common at seed stage. Protects early investors from getting worse terms.
Keep it simple. Speed matters more than complex terms.
Terms get more specific as investors have more leverage.