SAFE

A SAFE (Simple Agreement for Future Equity) is a contract where an investor gives you money now in exchange for shares later, when you raise a priced round. It defers the hard question of valuation, which is why it became the default instrument for early cheques. The investor's eventual share is set by a valuation cap, a discount, or both: the cap protects them if you raise at a sky-high price, the discount rewards them for backing you early. For a lean founder, a SAFE is fast and cheap to issue, with no interest, no maturity date, and minimal legal overhead. The catch is dilution you can't fully see until conversion. Stack several SAFEs at different caps and you can wake up owning far less of your company than you assumed. Model the cap table at conversion before you sign, not after, because SAFEs are easy to give away and impossible to take back.