What is a SAFE?
What investors really want is a simple way to purchase equity now while leaving the docs for later. So the folks at Y-Combinator invented the “Simple Agreement for Future Equity”. The SAFE runs only 7 pages and is not supposed to be modified.
Unlike a convertible note which purports to be a loan, the SAFE states that it is the purchase of equity. While the IRS has not made a ruling, since the SAFE is clearly not a loan, a strong case can be made that it must be equity and therefore eligible for the huge tax benefits of purchasing equity.
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