| name | safe-agreement |
| language | en |
| description | Drafts Simple Agreements for Future Equity (SAFE) for early-stage venture capital financing with valuation cap/discount mechanics, investor qualifications, and securities compliance. Use when drafting SAFEs, pre-seed investment documents, convertible equity instruments, or YC-style SAFE notes. |
| tags | ["agreement","corporate","drafting"] |
Simple Agreement for Future Equity (SAFE)
Drafts a SAFE granting investors future equity rights upon triggering events — no immediate ownership, no debt.
Quick Start
Gather before drafting:
- Company — legal name per certificate of incorporation, jurisdiction, state of formation
- Investor — legal name, entity type, accredited investor basis
- Economics — purchase amount, valuation cap, discount rate (if any)
- Cap table — existing SAFEs, convertible notes, fully-diluted share count
- Special terms — MFN clause, pro rata rights, side letters
Document Structure
Header & Recitals
| Element | Requirement |
|---|
| Company ID | Full legal name matching certificate of incorporation, entity type, jurisdiction |
| Investor ID | Legal name, entity type, capacity to contract |
| Purchase amount | Exact dollar figure |
| Core exchange | Capital → contractual right to future equity; state explicitly: no debt, no interest, no current stockholder status |
Conversion Mechanics
Three triggering events:
1. Equity Financing (automatic)
- Converts into preferred stock of same series issued to new investors
- Conversion price = lesser of:
- Cap price: Valuation Cap ÷ Pre-money fully-diluted capitalization
- Discount price: Price per share × (1 − Discount Rate)
- Shares = Purchase Amount ÷ Conversion Price
- Include worked numerical example
2. Liquidity Event (acquisition/merger/IPO)
- Investor elects: cash = Purchase Amount OR common stock = Purchase Amount ÷ Liquidity Price
- Specify election timeline and default
3. Dissolution
- Cash = Purchase Amount, pre-dissolution
- Priority: senior to common, subordinate to creditors/debt
Valuation Terms
| Term | Function |
|---|
| Valuation Cap | Ceiling on conversion valuation; larger stake if valuation exceeds cap |
| Discount Rate | Reduction from new investor price; rewards early risk |
| Interaction | Cap and discount are alternative (not additive); investor gets better result |
Representations
Investor:
Company:
Rights & Restrictions
Pre-conversion — no stockholder rights (no voting, dividends, distributions, preemptive rights).
Transfer — no transfer without written consent; unauthorized = void. Optional exceptions for affiliates, estate planning, retirement accounts.
Securities — unregistered; restrictive legends required; investor acknowledges illiquidity.
Administrative Provisions
| Provision | Standard |
|---|
| Governing law | State of incorporation or principal place of business |
| Disputes | Litigation venue OR arbitration (rules, count, seat, costs) |
| Amendments | Written, signed by both parties |
| Waivers | Explicit, written; no implied waiver |
| Integration | Entire agreement; supersedes prior negotiations |
| Notices | Email, certified mail, or courier; specify addresses; deemed-received rules |
| Severability | Reform invalid provisions; remainder survives |
Signature Blocks
Both Company and Investor: signature, printed name, title (entities), date.
Checks
- Defined terms — capitalize consistently; define before first use
- Math precision — conversion formulas unambiguous to any financial professional
- Cross-references — verify all internal section references
- No placeholders — replace all
[brackets] before finalizing
- YC compatibility — if referencing YC SAFEs, align with applicable template version (post-money vs. pre-money) and flag deviations
- Securities exemptions — confirm federal exemption (Reg D 506(b)/506(c)) and state blue sky requirements
- MFN conflicts — check prior SAFEs for MFN clauses that could trigger
- Missing info — identify gaps and request from user before finalizing
