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 Colorado, 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 SAFE is not a debt instrument, so it does not accrue interest or have a maturity date, and it does not provide investors with immediate equity or a promise of a specific number of shares. Instead, the number of shares and the price per share are determined during a subsequent financing round based on a valuation cap or discount rate specified in the SAFE. The terms of a SAFE are designed to be fair to both investors and company founders, but it's important to note that SAFEs may not be suitable for all companies or investors. While SAFEs are not specifically regulated by Colorado state statutes, they are subject to general contract law principles and federal securities laws. Companies issuing SAFEs must ensure compliance with the Securities Act of 1933 and the Securities Exchange Act of 1934, including any applicable exemptions from registration requirements. Founders and investors in Colorado considering a SAFE should consult with an attorney to understand the implications and ensure that the SAFE is properly structured and executed.