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 Michigan, 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 terms of a SAFE are not dictated by Michigan state statutes specifically, but rather are governed by general contract law and securities regulations. The use of SAFEs in Michigan must comply with both federal securities laws and any applicable state securities regulations. These regulations are designed to protect investors and ensure fair practices in the issuance of securities. It's important for both investors and startup founders to understand that while SAFEs are intended to be founder-friendly and efficient for early-stage financing, they are not suitable for all situations. Founders and investors in Michigan considering a SAFE should consult with an attorney to ensure that the agreement is properly structured and complies with all relevant laws.