SAFE Note 

A SAFE (Simple Agreement for Future Equity) Note is a financing contract used by startups to raise early-stage capital without immediately setting a valuation. It’s an agreement where an investor provides funding in exchange for the right to receive equity in the company at a future financing round, typically at a discounted price or with a valuation cap. 

SAFEs are simpler and faster to execute than convertible notes, as they don’t accrue interest or have a maturity date. Common components include: 

• Valuation cap: Maximum valuation for converting the SAFE into equity. 

• Discount rate: Percentage discount applied to the next funding round’s price per share. 

• Most Favored Nation (MFN) clause: Allows SAFE holders to adopt better terms if later investors receive more favorable terms.