A SAFE (simple agreement for future equity) is a standardized document used by startup companies for early-stage fundraising. A SAFE investment may convert to equity in the company in a future round of fundraising (Series A, for example) and does not give a SAFE investor a specific number of shares at the time of the investment. The price of shares owned by a SAFE investor are determined in the future round of fundraising.

The terms of a SAFE are intended to be balanced between the interests of the investors, and the founders or existing owners of the company, but a SAFE may not be appropriate for every early-stage company or investor.

The SAFE was created by Y Combinator, a well-known tech accelerator, in 2013.

In Alabama, as in other states, a SAFE (simple agreement for future equity) is a financial instrument used by startups during early-stage fundraising. It allows investors to convert their investment into equity at a later date, typically during a future equity financing round such as Series A. The main advantage of a SAFE is that it is simpler and more cost-effective than traditional convertible notes, as it does not accrue interest or have a maturity date. However, it is important to note that Alabama does not have specific statutes governing SAFEs, and they are instead subject to general contract law and securities regulations. Founders and investors in Alabama considering a SAFE should ensure that the agreement complies with both state and federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. It is advisable for parties involved in a SAFE to consult with an attorney to ensure that the terms are fair, clear, and legally sound, and that they understand the implications of the investment, including the dilution of ownership and the conditions under which the investment may convert to equity.