Free SAFE (Simple Agreement for Future Equity) Template
A simplified SAFE investment agreement explaining the investment amount, valuation cap, discount, conversion events and investor rights for early-stage startups.
A SAFE (Simple Agreement for Future Equity) lets an investor give money to a startup now in exchange for shares later, usually when the company raises a priced round. The valuation cap and discount decide how many shares the investor gets. Many startups use Y Combinator's published standard SAFE forms.
Fill in this template online
Answer the blanks, choose the options, see a live preview and download your completed document. Free, no account needed.
SIMPLE AGREEMENT FOR FUTURE EQUITY (SIMPLIFIED FORM)
IMPORTANT: Many startups use the standard post-money SAFE forms published by Y Combinator, which investors recognise. This simplified form explains the key terms and is not a substitute for those forms or for securities law advice. SAFEs are securities; offerings must comply with federal and state securities laws.
THIS INSTRUMENT AND ANY SECURITIES ISSUABLE ON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT AS PERMITTED BY THOSE LAWS.
This SAFE is made on [DATE] between [COMPANY LEGAL NAME], a [Delaware] corporation ("Company"), and [INVESTOR NAME] ("Investor").
1. INVESTMENT. Investor pays the Company $[AMOUNT] ("Purchase Amount") in exchange for the right to receive shares of the Company's capital stock on the terms below.
2. KEY TERMS.
(a) Post-money valuation cap: $[AMOUNT] ("Valuation Cap").
(b) Discount rate: [80]% (a [20]% discount), [or "None"].
(c) Most favored nation: [Yes/No]. If Yes, and the Company later issues SAFEs with better terms before conversion, Investor may elect to receive those terms.
3. EQUITY FINANCING. If the Company sells preferred stock at a fixed valuation in a bona fide financing ("Equity Financing"), this SAFE automatically converts into shares of the preferred stock sold in that financing. The number of shares equals the Purchase Amount divided by the lower of: (a) the price per share based on the Valuation Cap and the Company's post-money capitalization as defined in the standard form; and (b) the price per share paid by new investors multiplied by the discount rate.
4. LIQUIDITY EVENT. If the Company is acquired or goes public before an Equity Financing, Investor will receive, at Investor's election, either (a) a cash payment equal to the Purchase Amount, or (b) the amount payable on the number of common shares equal to the Purchase Amount divided by the price per share based on the Valuation Cap, subject to available proceeds and the priority rules in the standard form.
5. DISSOLUTION. If the Company dissolves or winds up before conversion, Investor is entitled to receive up to the Purchase Amount before common stockholders, on par with other SAFE holders, subject to creditors being paid first.
6. NO SHAREHOLDER RIGHTS. Until conversion, Investor has no voting, dividend or information rights as a shareholder [except as set out in a separate side letter, such as pro rata rights or information rights].
7. COMPANY REPRESENTATIONS. The Company is duly organised, authorised to enter this SAFE, and this SAFE does not violate its governing documents or material agreements.
8. INVESTOR REPRESENTATIONS. Investor is an accredited investor [or otherwise eligible under the applicable exemption], is investing for its own account, understands the investment is speculative and may be lost entirely, and has had the opportunity to ask questions and seek advice.
9. TRANSFER. This SAFE may not be transferred without the Company's consent, except to an affiliate of Investor.
10. GOVERNING LAW. This SAFE is governed by the laws of [Delaware].
GENERAL PROVISIONS
(a) Notices. Notices must be in writing and sent to the addresses or emails above (or as later updated by notice). Email notice is effective when sent, unless the sender receives a delivery failure message.
(b) Entire agreement. This agreement, with any schedules and exhibits, is the entire agreement between the parties on its subject and replaces all prior discussions and agreements on that subject.
(c) Amendments and waivers. Changes must be in writing and signed by both parties. A failure or delay in enforcing any term is not a waiver of it.
(d) Severability. If any provision is found unenforceable, it will be limited to the minimum extent necessary and the rest of this agreement will remain in effect.
(e) Assignment. Neither party may assign this agreement without the other party's written consent, except to a successor in a merger or sale of substantially all of its business, on notice.
(f) Relationship. Nothing in this agreement creates a partnership, joint venture or agency relationship unless expressly stated.
(g) Counterparts and electronic signatures. This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.
(h) Independent advice. Each party has had the opportunity to review this agreement with its own legal counsel and signs it voluntarily.
COMPANY: ______________________ Name/Title: ______________ Date: __________
INVESTOR: _____________________ Date: __________
---
This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.When to use this template
- A startup raising a pre-seed or seed round before a priced equity round.
- An angel investor wanting to understand SAFE terms before investing.
- Explaining SAFE mechanics to co-founders or advisers.
How to fill it in
- Consider using Y Combinator's standard post-money SAFE, which investors know.
- Set the purchase amount, valuation cap and any discount.
- Decide on most-favored-nation, pro rata or information rights, often in a side letter.
- Confirm the investor's eligibility and the securities law exemption.
- Track all SAFEs to understand dilution before the priced round.
Key clauses to check
- Valuation cap
- The maximum valuation at which the SAFE converts; lower caps mean more shares for the investor.
- Discount
- Gives the investor a lower price than new investors.
- Post-money vs pre-money
- Post-money SAFEs make dilution easier to calculate for founders and investors.
- Liquidity event
- Protects the investor if the company is acquired before converting.
- Securities compliance
- SAFEs are securities and need an exemption.
Frequently asked questions
What is a SAFE?
An agreement where an investor pays now and receives shares later, usually at the next priced round, based on a valuation cap and discount.
What is a valuation cap in a SAFE?
The maximum company valuation used to calculate the investor's conversion price, protecting early investors if the valuation rises.
Is a SAFE debt?
No. It has no interest or maturity date, unlike a convertible note.
What happens to a SAFE if the startup fails?
If the company dissolves before a priced round, SAFE holders usually have a right to receive money back from remaining assets, but they generally rank behind creditors. In many failures there is little or nothing left, so investors often lose their investment. Read the dissolution section of the specific SAFE, since terms can differ between versions and custom SAFEs.
What is the difference between a SAFE and a convertible note?
Both let investors put money in now and receive equity later, often with a valuation cap or discount. A convertible note is debt, with an interest rate and a maturity date when it may need to be repaid or converted. A SAFE is not debt, has no interest and usually no maturity date, which makes it simpler for founders.
Want to check if a contract is fair before you sign?
If someone sent you a contract contract, don't guess. We flag risky clauses in plain English, tuned to your state, with a downloadable report and suggested-fix redline.
Read before you sign
- Co-Founder Agreements: What Should Be in Yours Before You Split EquityA handshake and a cap table entry are not a co-founder agreement. Here's what actually needs to be in writing before you build together.
- Should I Sign This? A Simple Framework for Any ContractWhen you are staring at a contract and wondering whether to sign, you do not need a law degree, you need a framework. Here is the one our team uses, and the questions to answer before you put your name on it.
- Is There a 3-Day Right to Cancel a Contract? The Myth, the Real Rules and Who Actually Gets OneNo law lets you cancel any contract within 3 days. See who does get a right to cancel: door-to-door sales, home equity loans, gyms, timeshares and more.
- What Is a Fair Liability Cap in a Contract?A limitation-of-liability clause sets the most you can recover if a deal goes wrong. Here is how liability caps work, what is reasonable, and when a low cap should worry you.
More Business templates
This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.