· Simple Agreements for Future Equity (SAFEs) 101

This article will provide a summary of what a SAFE is. If you're looking for steps on creating a SAFE in Shoobx, this article can help. 

A Simple Agreement for Future Equity (SAFE) is an investment instrument that will convert to equity when an equity financing takes place. The SAFE was invented by Y Combinator. Because of their simplicity and the fact that they do not require a valuation for the company, SAFEs have become very popular with startup founders looking to raise their first round of outside capital. 

A SAFE financing should be done in collaboration with the company’s outside counsel.

What is the required documentation for a SAFE?

The SAFE is a single-document instrument that requires little negotiation and which the company board approves. Because of this, it can be the fastest and the least costly type of financing to implement. 

How do I know if a SAFE is right for me?

A lot of times, your investor will have a preference on this. Your lawyer will also be able to advise you on which early stage financing option would be best for your company.

Is a KISS the same as a SAFE?

In a nutshell, the "Keep It Simple Security" (KISS) is very similar to a SAFE. The KISS was created by 500 Startups to make financing simpler, cheaper, and more balanced, so it's similar in motivation and complexity to the SAFE.

I already have a SAFE--how do I find the investor and investment amount?

The investor's name and their purchase amount will likely appear at the top of the SAFE document. If it's not obvious based on the SAFE you're looking at, you can turn to your lawyer to ask their advice on interpreting your document.

Can I use Shoobx for my SAFE?

Yes! Shoobx will walk you through the creation and execution of your next SAFE or capture the details of a SAFE you've already executed in our SAFE Workflow.

Is the Shoobx SAFE template pre-money or post-money?

The Shoobx template is taken from the Y Combinator standard and is post-money.