# Simple Agreement for Future Equity > Download our Simple Agreement for Future Equity template or generate a bespoke version tailored to your needs. Fast, editable, and fully compliant with US law. **Document type:** Simple Agreement for Future Equity **Category:** other **Jurisdiction:** the USA **Governing law:** United States **Last updated:** 2026-06-17 ## What is a Simple Agreement for Future Equity? A Simple Agreement for Future Equity (SAFE) lets startups raise money from investors now while delaying the complex task of setting a company valuation. It's similar to a convertible note, but simpler and without debt elements - investors give cash today in exchange for the right to get equity later, usually during the next funding round. SAFEs became popular after Y Combinator introduced them in 2013, and they've since become a standard fundraising tool for early-stage American startups. They give founders quick access to capital without immediately diluting ownership, while investors get the potential upside of converting their investment to shares at a discount when the company raises its next round. ## When should you use a Simple Agreement for Future Equity? Use a Simple Agreement for Future Equity when your startup needs quick funding but you're not ready to set a firm valuation. This tool works especially well for early-stage companies raising their first round of capital, particularly when traditional equity rounds would be too expensive or time-consuming to structure. SAFEs make the most sense when you need capital quickly, have strong growth potential, and expect to raise a priced equity round within 12-24 months. They're particularly valuable for tech startups and other high-growth ventures where rapid development matters more than immediate revenue. Just ensure your investors understand that their equity stake will be determined in your next funding round. ## What are the different types of Simple Agreement for Future Equity? - **Safe Equity Agreement**: Standard post-money SAFE with a valuation cap - the most common type used by Y Combinator and similar accelerators - Valuation Cap Only SAFE: Sets a maximum price for conversion but no discount - Discount Only SAFE: Offers a percentage discount on the next round's price, without a valuation cap - Most Favored Nation (MFN) SAFE: Automatically matches the best terms given to other SAFE investors - Cap and Discount SAFE: Combines both a valuation cap and discount rate, giving investors the more favorable conversion term ## Who should typically use a Simple Agreement for Future Equity? - **Startup Founders**: Create and issue SAFEs to raise capital without immediately giving away equity or taking on debt - **Angel Investors**: Provide early-stage funding in exchange for future equity rights, often investing $25,000 to $250,000 - **Startup Attorneys**: Draft and review SAFE agreements, ensuring legal compliance and protecting both parties' interests - **Venture Capital Firms**: Sometimes use SAFEs for seed-stage investments, particularly in high-growth technology startups - **Corporate Officers**: Sign and execute SAFEs on behalf of the company, managing investor relations and documentation ## How do you write a Simple Agreement for Future Equity? - **Company Details**: Gather your legal business name, incorporation details, and current capitalization structure - **Investment Terms**: Decide on the investment amount, valuation cap, and any discount rate you'll offer - **Investor Information**: Collect the investor's legal name, contact details, and accredited investor status verification - **Conversion Triggers**: Define what events will trigger the SAFE's conversion into equity (usually your next priced round) - **Board Approval**: Document board authorization for issuing SAFEs and confirm signature authority - **Template Selection**: Use our platform to generate a legally-sound SAFE agreement that includes all required elements ## What should be included in a Simple Agreement for Future Equity? - **Purchase Amount**: Clear statement of investment sum and payment terms - **Conversion Terms**: Detailed mechanics for converting the investment into equity, including valuation cap and/or discount rate - **Equity Rights**: Specific type and class of shares investors will receive upon conversion - **Trigger Events**: Defined circumstances that cause automatic conversion, like equity financing or sale - **Pro-rata Rights**: Investor's right to participate in future funding rounds - **Dissolution Rights**: How the investment is handled if the company dissolves - **Amendment Terms**: Process for modifying the agreement with investor consent - **Governing Law**: Statement specifying applicable state jurisdiction ## What's the difference between a Simple Agreement for Future Equity and an Equity Agreement? A Simple Agreement for Future Equity (SAFE) differs significantly from an [Equity Agreement](https://www.genieai.co/en-us/template-type/equity-agreement). While both involve company ownership, they serve distinct purposes and operate differently in practice. - **Timing of Ownership**: SAFEs delay equity distribution until a future event, while Equity Agreements transfer ownership immediately - **Valuation Requirements**: SAFEs don't need a current company valuation, making them ideal for early-stage startups. Equity Agreements require setting a specific valuation upfront - **Legal Complexity**: SAFEs are intentionally simple documents with standardized terms. Equity Agreements typically involve more complex terms, rights, and obligations - **Cost and Speed**: SAFEs can be executed quickly with minimal legal costs. Equity Agreements often require extensive negotiation and legal review - **Investor Rights**: SAFEs provide fewer immediate rights to investors, while Equity Agreements grant immediate shareholder privileges and voting rights --- This is the Markdown representation of [https://www.genieai.co/en-us/template-type/simple-agreement-for-future-equity](https://www.genieai.co/en-us/template-type/simple-agreement-for-future-equity), provided for AI agents and crawlers. The HTML page is canonical. See [/llms.txt](https://www.genieai.co/llms.txt) for the full content map.