← Glossary GLOSSARY

SAFE (Simple Agreement for Future Equity)

An investment instrument that converts into equity at a future priced round.

---

The longer version

A SAFE gives the investor the right to receive shares in your next priced round, typically with a valuation cap and / or discount. Unlike a convertible note, a SAFE has no interest, no maturity date, and no debt classification.

Why it matters in your books

SAFEs sit on the balance sheet as equity-like instruments and convert later. For accounting, they are usually a separate line under equity until conversion; for tax, they can affect QSBS holding-period analysis. The terms in the SAFE matter.