Created by Y Combinator, a SAFE (Simple Agreement for Future Equity) grants an investor the right to purchase equity at a future date.  

A SAFE is best used for startups in tech hubs that intend to raise venture capital eventually, and have a chance to be acquired or file for an IPO.  It should not be used by lifestyle companies that do not intend to raise follow-on financing.  

Unlike a convertible note, a SAFE is not a loan. As such, it does not accrue interest or have a maturity date. This makes things simpler and negates much of the need to amend the agreement in the future. For example, it helps startups not waste time extending maturity dates or revising interest rates, if a Series A financing takes longer than you first expect. It also better aligns with the intention of most equity investors, who never intended to be lenders.

Wefunder offers the Y Combinator SAFEs as part of our default contracts you can use out of the box, modified only to fit your local country's laws. 

The following terms are customizable:

• Valuation Cap. The Valuation Cap is the most important term. It entitles investors to equity priced at the lower of the valuation cap or the pre-money valuation in the subsequent financing. Typical Valuation Caps for early-stage startups currently range from €4 million to €20 million.
• Discount Rate. It gives investors a discount on the price of stock when the pre-money valuation is less than your valuation cap. Typical discounts range from 10% to 20%.
• Governing Law. You can choose the country.
• Most Favored Nation (MFN) provision.  The default is false.  However, if you add this provision, investors will match the terms of any better terms you may offer other non-Wefunder investors.