A SAFE (Simple Agreement for Future Equity) is an investment instrument created by Y Combinator as a simpler alternative to convertible notes. A SAFE investor pays cash now in exchange for the right to receive equity in a future priced round, typically at a discount (10–20%) to the price paid by new investors, and often subject to a valuation cap.
Unlike a convertible note, a SAFE carries no interest rate, no maturity date, and is not classified as debt — it is treated as a future equity right. This makes SAFEs administratively simpler and avoids the risk of debt coming due at an inopportune time. SAFEs have become widely adopted in Southeast Asian seed and pre-seed rounds, though investors should be aware that post-money SAFEs (the current standard) fully dilute founders and prior SAFE holders immediately upon issuance.