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 South Dakota, as in other states, a SAFE (simple agreement for future equity) is not specifically regulated by state statutes but is governed by general principles of contract law and securities law. As a financial instrument used for early-stage fundraising, a SAFE allows investors to convert their investment into equity at a later financing round, typically at a discount. The terms of a SAFE are negotiated between the company and the investors, aiming to balance the interests of both parties. While South Dakota does not have specific laws regarding SAFEs, companies must comply with federal securities laws and regulations, including the Securities Act of 1933 and the Securities Exchange Act of 1934, when offering SAFEs. These federal laws require proper disclosure of the investment terms and risks to potential investors. Companies should consult with an attorney to ensure compliance with all applicable laws and to tailor the SAFE to the specific needs of the company and the investors.