What is a SAFE
A SAFE (Simple Agreement for Future Equity) is a short contract an investor signs to fund your startup now in exchange for the right to shares of stock in your startup later. It converts into shares automatically when your startup raises a priced round.
- Standard: The default instrument investors expect.
- Simple: One short document, and usually the only term to negotiate is the valuation cap.
- Clarity: The ownership you're selling is transparent and easy to calculate.
- Proven: Thousands of startups, billions raised, over a decade of use.
What is "Send a SAFE"
"Send a SAFE" is the official tool by Y Combinator for sending SAFEs. It is the fastest way to generate, sign, and send a SAFE — in about two minutes.
- By the creators: The SAFE was invented at YC. YC's SAFE is the original and most up-to-date instrument straight from the source, not a copy.
- Free to send: Two minutes to generate, sign, and send a SAFE — for free.
- Built for agents: The Send a SAFE tool is programmatic and agent-friendly. An AI agent can draft and send a SAFE on your behalf.
- Industry Standard: The SAFE is the same instrument YC uses to fund its startups. Send one, and your startup's fundraise is already on the instrument that investors, and YC, trust.
How SAFEs work
Pick the fundraise amount. The valuation cap follows.
The biggest advantage of the post-money SAFE is that the amount of ownership sold is immediately transparent and calculable for both the founder and the investor. Start from how much you're targeting and how much ownership you're willing to sell — the valuation cap follows from the two.
Say you're targeting a $1M raise and 15% ownership sold. Your post-money valuation cap is $1M ÷ 15% = ~$6.7M, or "I'm targeting $1M at $6.7M post / $5.7M pre." Raise less on that cap and you sell less: $500k is ~7.5%, $800k is ~12%. You can also raise on more than one cap — $500k at a $5.5M cap (~9%) plus $500k at an $8.3M cap (~6%) gets you to the same ~15% sold.
Try the SAFE calculator
Run your own numbers in the SAFE calculator.
Try the SAFE CalculatorSAFE terms, defined
The handful of terms worth knowing before you raise on a SAFE.
The highest valuation at which a SAFE converts into shares. If your startup's priced round values the company above the valuation cap, the SAFE converts at the valuation cap — rewarding the investor for backing your company early. The ownership you sell equals the investment amount divided by the valuation cap.
A discount rewards early investors with a lower price than your startup's next priced round. Example: on a 20% discount SAFE, if you later raise a priced round, those SAFE investors get a discounted price of 20% less than what the new investors pay.
A post-money SAFE is a SAFE that has a valuation cap that is "post-money," meaning it's the valuation of your company after the investment is made (in other words, it includes the SAFE investment). The post-money SAFE has been the YC standard since 2018.
An MFN SAFE has no valuation cap or discount; instead it automatically takes the valuation cap or discount of any SAFE you issue later, so an early investor can invest now without having to decide on these terms.
The right, not the obligation, for an investor to invest money into your startup's future priced round to maintain their percentage ownership in your startup. The pro rata right lives in an optional, standardized side letter rather than in the SAFE itself.
A SAFE isn't shares in your startup until it converts into preferred stock, which happens automatically when you raise a priced round.
SAFE vs. Convertible Note vs. Priced Round
Not sure which instrument best fits your fundraise? See how the three compare on cost, speed, and control.
See a comparisonDownload the forms
US companies
Three versions of the post-money SAFE for US companies, plus an optional side letter.
Non-US companies
Valuation Cap versions for companies formed in Canada, the Cayman Islands, and Singapore, each with an optional side letter. Consult a lawyer licensed in the relevant country before using these.
New to SAFEs or want more information?
Read the SAFE User Guide for sample conversion math, an explanation of the pro rata side letter, and best practices.
Frequently Asked Questions
The instrument itself — what a SAFE is, how it converts, and the terms behind it.
A SAFE is a contract that lets an investor invest in your startup now in exchange for the right to shares of your startup's stock later. A SAFE converts into shares automatically when you raise a priced round (an "equity financing"). It was created at Y Combinator in 2013 and is the most common way early-stage startups raise their early investments.
A SAFE is not a debt and not a loan — it has no interest and no maturity date — but it isn't stock until it converts into preferred shares when your startup raises an equity financing.
Both SAFEs and convertible promissory notes convert into equity later, but a convertible note is debt — interest accrues and the note has a maturity date set for repayment or forced conversion. A SAFE is not debt, it has no interest or maturity dates, so it's simpler, faster, and cheaper to sign. See the full SAFE vs. convertible note vs. priced round comparison.
When your company sells shares of preferred stock in an equity financing, the outstanding SAFEs will convert into shares of preferred stock. There is no threshold amount of money in the post-money SAFE that your company needs to raise to trigger the conversion.
The conversion of a SAFE in an equity financing is automatic and the SAFE then terminates. A SAFE is intended to turn SAFE holders into stockholders.
The valuation cap is the highest valuation at which a SAFE converts. If the equity financing values your startup above the cap, the SAFE investor converts at the valuation cap instead — rewarding them for investing early. On a post-money SAFE, ownership sold equals the investment amount divided by the valuation cap.
A discount rate rewards earlier investors with a lower price than the price at the equity financing. On a 20% discount SAFE, the SAFE investors convert at a price per share that is 20% below the price per share in the equity financing. Discounts are commonly 10–20%.
The MFN SAFE is one of YC's three SAFE forms. It has no cap or discount; instead it automatically takes the best terms of any SAFE you issue later. It lets an early investor fund your startup now without having to determine a valuation cap or a discount.
An MFN SAFE adopts the best terms of any SAFE your startup issues later. The date the MFN SAFE uses is the later of signing the SAFE or receiving the wire, not when you sent it. So close your lower valuation cap SAFEs (fully wired) before you issue an uncapped MFN. You sign last and control the date.
There's no separate uncapped SAFE form. If you want to issue a SAFE with no valuation cap, download the discount SAFE form and set the "Discount Rate" to 100%.
On a post-money valuation cap SAFE, the ownership sold equals the investment divided by the valuation cap. For example, $500k on a $6.7M post-money cap is about 7.5%, and $1M on the same cap is about 15%. For discount rate or MFN SAFEs, the exact ownership sold will be determined at the equity financing.
The valuation cap in a post-money SAFE is stated in terms of a post-money valuation, whereas the valuation cap in a pre-money SAFE is based on a pre-money valuation. A post-money valuation and a pre-money valuation are just two different ways of framing the same valuation of your startup, but at different points in time. A pre-money valuation is the valuation of the company immediately before the company receives the investment. A post-money valuation is just the valuation immediately after the investment is made. The post-money valuation cap is "post" all of the money you raise on SAFEs. It is NOT also "post" the equity financing money. The post-money valuation cap is also "post" the options and option pool existing prior to the equity financing, but is NOT also "post" the new or increased option pool adopted as part of the equity financing. YC standardized on the post-money SAFE in 2018.
Your investor converts into shares priced at the (lower) valuation cap rather than the (higher) valuation of the equity financing. When the equity financing prices your startup above the SAFE's valuation cap, the cap applies, which is the whole point of investing early.
Pro rata rights let an investor invest money into your future equity financing to keep their ownership percentage of your startup from shrinking. Giving an investor pro rata rights is optional. Pro rata rights live in a separate, standardized pro rata side letter rather than in the SAFE itself.
Keep the SAFE unmodified, and give any agreed-upon rights in a separate side letter. It's fine to push back on granting any of these rights; evaluate whether it's appropriate to give any of them based on the amount that an investor is investing. An investor buying a $500k SAFE has a good case for pro rata rights versus one who is investing $10k.
Issue a separate new SAFE for the additional amount, on the same terms as the first SAFE. That's the simplest, cleanest approach, and it leaves the original SAFE intact.
We cannot provide accounting or tax advice, but a small mismatch (usually a few dollars from wire fees or currency conversion) almost never causes a real problem. Technically the investor owes any shortfall, so the cleanest fix is to ask them to wire the difference or cover it yourself, and keep a note for your records. For an overpayment, keep the exact amount of the SAFE investment and refund the rest to the investor.
An acquisition of your startup, or an IPO, is a "Liquidity Event" in the SAFE. In the valuation cap SAFE, the investor gets the greater of 1x their money back, or what they'd receive if the SAFE had converted to common stock. A shutdown of your startup is a "Dissolution Event" in the SAFE. In the valuation cap SAFE, the investor gets their SAFE purchase amount back. In both cases, a SAFE is junior to outstanding debt and ranks like standard non-participating preferred stock.
A SAFE has no maturity date. A SAFE is designed to expire and terminate only when the investor has received stock in an equity financing (or otherwise). In theory, a SAFE could remain outstanding for a long time without the need to "extend" any dates or time periods.
The SAFE includes a transfer restriction that provides that an investor can't transfer it without the issuing startup's consent, except to an affiliate of the investor.
A SAFE can be amended with the written consent of the issuing company and that investor. Amendments across a series of SAFEs with the same terms (i.e. post-money valuation cap or discount) can be made with a majority-in-interest of those investors, but an individual investor's purchase amount can't be changed without that investor's consent.
Yes. SAFE investors should be accredited. If an investor isn't accredited at the time of your equity financing, your startup can rescind the SAFE by returning the investor's money.
Your startup's board of directors must approve issuing SAFEs.
The SAFE was created at Y Combinator by Carolynn Levy in 2013. All of the SAFE forms are free to download and use. YC's tool to generate, sign, and send the official SAFE forms is free to use.