What is a SAFE in startup fundraising?

A SAFE (Simple Agreement for Future Equity) is an investment contract that gives an investor the right to receive shares in a future priced round, in exchange for money today. It is not debt: there is no interest and no maturity date, and nothing converts until a triggering event — usually the next equity round, an acquisition, or an IPO.

SAFEs are the default instrument for pre-seed and much of seed investing in the US because they close fast and cheaply — no valuation negotiation is required beyond a valuation cap and/or discount. Y Combinator introduced the SAFE in 2013 and publishes the standard documents; the 'post-money SAFE' variant, which fixes the investor's ownership percentage at conversion, has been the standard since 2018.