The SAFE Note
A SAFE is a promise of future equity. It is not debt. It is fast and cheap because it avoids complex legal negotiations. Use the standard Y Combinator template. Negotiate the valuation cap and nothing else.
What is Valuation Cap?
Valuation Cap is The Valuation Cap is the maximum price per share that an early investor will pay in a future priced round.
The 3 Core Benefits
Speed of Closing
You can finalize an investment in days instead of months. This allows you to get back to building your product immediately.
Low Legal Costs
Using a standard template saves thousands in attorney fees. Spend that capital on engineering and growth instead.
Strategy Deep Dive
You do not need expensive lawyers to raise your seed round. The process should be simple and fast.
The SAFE note is the industry standard for early stage investments. It stands for Simple Agreement for Future Equity.
It allows you to close deals one by one. You do not have to wait for a single closing date with every investor.
The valuation cap rewards early investors for their risk. If your company value grows, they get shares at the lower capped price.
Do not edit the standard legal text. Investors trust the original YC version. Changes create friction and slow down the wire.
Focus on getting the capital you need to reach your next meaningful milestone. Keep the momentum high.
Issuing a SAFE
Use the YC Template
Download the post-money SAFE from the Y Combinator website. Use the version that is most common in your region.
Set the Cap
Choose a valuation cap that is fair for both you and the investor. Base it on your current traction and market rates.
Sign and Wire
Use digital signature tools like DocuSign to close the deal instantly. Send the bank details immediately after signing.
Priced Equity Round vs. SAFE Note
| Feature | Priced Equity Round | SAFE Note |
|---|---|---|
| Time to Close | Months | Days |
| Legal Fees | High | Zero |
Frequently Asked Questions
What if I fail?
SAFE holders are not lenders. They lose their investment if the company goes under. They cannot demand repayment like a loan.
Post vs Pre Money?
Always use the post-money version. it makes ownership math much simpler for you and your investors to understand.
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