A SAFE (Simple Agreement for Future Equity) was created by startup accelerator Y Combinator in 2013 as a simpler alternative to the convertible note — it carries no interest and no maturity date, and converts into equity automatically once the startup raises its next priced round, usually at a valuation cap and/or discount that rewards the earliest investors. Because it’s just a handful of pages with mostly standardized terms, a SAFE is extremely fast and cheap to sign compared to a full priced equity round.

That simplicity is exactly why SAFEs have become dominant in the earliest stages of US startup fundraising — reportedly used in roughly 90% of pre-seed deals tracked by the equity-management platform Carta in early 2025. A nuance worth knowing: a SAFE is not a universal global standard — whether it’s legally treated as a security, how it’s taxed, and whether local corporate law recognizes it cleanly all vary by country, so a founder shouldn’t assume a US-style SAFE template works as-is outside the US.

🇵🇭 Philippine Example

SAFEs are far less standardized and common in the Philippine startup market than in the US, since the Revised Corporation Code and Securities and Exchange Commission rules around share issuance mean many Philippine startup lawyers still favor either a straightforward priced equity round or a convertible note with clearer, more locally familiar debt characteristics. Philippine founders sometimes encounter a SAFE for the first time through a US-based accelerator or international investor rather than through a purely local deal.

Related Terms