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 California, a SAFE (Simple Agreement for Future Equity) is commonly used by startups during early-stage fundraising. It represents a contractual agreement between the investor and the company, where the investor provides capital to the company in exchange for the right to receive equity at a later date, typically during a future equity financing round. The SAFE is designed to be a simpler alternative to convertible notes, with fewer terms and no interest rate or maturity date. The terms of a SAFE often include a valuation cap or discount rate, which can affect the price at which the SAFE converts into equity. While the SAFE is intended to be founder-friendly and efficient for early-stage investment, it's important for both founders and investors to carefully consider whether a SAFE aligns with their financial interests and investment strategy. California law does not specifically regulate SAFEs, but they must comply with federal and state securities laws, which require proper disclosure of information to investors and, in some cases, registration of the securities unless an exemption applies. Founders and investors in California are advised to consult with an attorney to ensure that their use of SAFEs adheres to applicable securities regulations and to tailor the agreement to their specific needs.