The alternative to the Convertible Note.
The Simple Agreement For Equity (SAFE) is an alternative to the Convertible Note that is often employed by founders and investors looking to close a deal quickly.
SAFE Agreements are priced options investors pay for equity in a business, to be converted at a future financing round. Extremely similar to Convertible Notes and often used interchangeably, there are numerous advantages to SAFEs, namely:
- Standardization. Because SAFEs are standardized, there are usually very few specialized terms to negotiate.
- Speed and Efficiency. In comparison to a priced financing round, SAFEs can be completed in a very short period of time; as quick as a few hours of negotiation.
- Founder Friendly. SAFEs are generally considered to be more founder friendly than Convertible Notes.
- Flexibility. SAFEs allow founders to raise whatever amount their business needs to an amount of their choosing.