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 like Series A. The key feature of a SAFE is that it does not assign a specific number of shares at the time of investment; instead, the number of shares and the price per share are determined during a subsequent funding round based on the valuation of the company at that time. While the terms of a SAFE are designed to be fair to both investors and company founders, it's important to note that they may not be suitable for all situations. Companies considering using a SAFE should consult with an attorney to ensure that it aligns with their fundraising strategy and complies with applicable state and federal securities laws. Investors should also seek legal advice to understand the risks and implications of a SAFE investment. In Alabama, the use of SAFEs is subject to the same legal and regulatory framework that governs securities, which includes both state statutes and federal law.