Simple Agreement for Future Equity: A General Guide
Jump to Section
Quick Facts — Simple Agreement for Future Equity Lawyers
- Avg cost to draft a SAFE Note: $590.00
- Avg cost to review a SAFE Note: $500.00
- Lawyers available: 141 financial lawyers
- Clients helped: 231 recent simple agreement for future equity projects
- Avg lawyer rating: 4.95 (45 reviews)
What Is a Simple Agreement for Future Equity?
A Simple Agreement for Future Equity (SAFE) is an investment structure, formalized through a financing contract, that allows early-stage startups to invest in themselves by raising capital through a process called seed financing rounds.
It provides investors the right to purchase a specified number of shares in the future from a company, at an agreed-upon price. This price is usually at the same valuation as other investors participating in the SAFE.
The term of the agreement is usually set at no more than seven years and generally includes a 1x return on investment if investors follow through with their commitment to becoming shareholders of record after a three-year holding period.
A SAFE is most commonly offered as part of a convertible note, or SAFE note — a short-term bank loan with an attached conversion option. This type of agreement is commonly referred to as an equity agreement and are formalized through an equity purchase agreement, or contract, that can include an equity commitment letter as well as an investor rights agreement.
Equity agreements protect both parties in a deal of this nature. SAFEs can be used by companies seeking growth capital from angel investors or venture capitalists as part of seed financing rounds.
Here is an article explaining more about a simple agreement for future equity.
What’s Included in a Simple Agreement for Future Equity?
The key terms of a SAFE include the investment amount, the valuation cap, and the conversion discount.
Investment Amount
The investment amount is the amount of money that the investor is investing in the company. Investors are attracted to companies with revenue and growth potential. If you can show investors that you have proof that customers are willing to pay for your product, they will feel more confident investing in you.
Demonstrate traction through metrics like daily active users, monthly recurring revenue (MRR), or sales pipeline. The investment amount is the total amount a startup receives from investors at one time. This figure often has multiple components such as:
- Equity. Equity refers to ownership in a company
- Convertible Debt. Convertible debt refers to funds received by a company that must be paid back with interest before equity financing can be raised again
Valuation Cap
The valuation cap is the maximum value of the company that the investor is entitled to purchase shares. This could be a lower value than the pre-money valuation of the company. The valuation cap may be set by either party; however, it is often set by investors to protect themselves from overvaluation.
- Pre-money valuation cap. This is calculated by multiplying the pre-money valuation by an agreed-upon multiplier (1x, 1.25x, 1.5x).
- Post-money valuation cap. This is calculated by multiplying the post-money (including preferred shares) by an agreed-upon multiplier (1x, 1.25x, 1.5x). For example, A company has been valued at $1 million pre-money and $4 million post-money with a 1x multiplier for preferred shareholders. The investor would then have a right to purchase $3 million worth of shares at $4 million post-money ($4-$1).
Conversion Discount
The conversion discount is the percentage discount that the investor receives on the shares that they purchase. For example, if an investor purchases 100,000 shares at $1.00 per share and their investment has a 5% conversion discount, then they’d receive 95,000 of those shares at $0.95 per share. In this case, they would own 95,000 shares and still have 5,000 left to convert.
Here is an article about what startups should know about a SAFE agreement.
Image via Pexels by Essow
Types of Simple Agreements for Future Equity
Valuation cap, no discount.
The most common type of SAFE is the valuation cap, no discount SAFE. This type of SAFE does not provide the investor with a discount on the shares that they purchase.
Valuation cap, with discount.
Another type of SAFE is the valuation cap, with discount SAFE. This type of SAFE provides the investor with a discount on the shares that they purchase. The discount is usually between 10% and 20%.
No valuation cap, with discount.
The third type of SAFE is the no valuation cap, with discount SAFE. This type of SAFE does not have a valuation cap but does provide the investor with a discount on the shares that they purchase. The discount is usually between 10% and 20%.
No valuation cap, no discount.
The fourth and final type of SAFE is the no valuation cap, no discount SAFE. This type of SAFE does not have a valuation cap and does not provide the investor with a discount on the shares that they purchase.
Here is an article outlining what a SAFE is.
What Is the Purpose of a Simple Agreement for Future Equity?
A SAFE is an agreement between an investor and a company that allows the investor to purchase shares in the company at a future date. The agreement is called SAFE because it is a simple agreement that does not have the same terms and conditions as a traditional investment agreement.A SAFE allows a company to raise money from investors without having to go through the traditional equity financing process. This can be a helpful tool for companies that are not ready to go through the equity financing process or for companies that want to raise money quickly.
Here is an article outlining five key things you should know about a SAFE agreement.
Are SAFEs Equity or Debt?
SAFEs are structured with a company's equity as the underlying asset. This means that SAFEs are considered to be equity instruments rather than debt instruments. This is because the equity agreement does not require the company to pay back the investment, with interest, as a debt instrument would.
Here is an article about equity investments vs. convertible debt instruments.
How Does a Simple Agreement for Future Equity Work?
A company will issue a SAFE to an investor in exchange for an agreed-upon price. The SAFE will have a valuation cap and a conversion discount. The valuation cap is the maximum amount of money that the investor can pay for the shares. The conversion discount is the percentage discount that the investor will receive on the shares.The investor will be able to purchase the shares at the valuation cap price at a later date. The shares will convert into equity at a later date, usually when the company raises money through a Series A financing round.
Here is an article outlining key terms and explaining how SAFE agreements work.
Advantages and Challenges of Using a Simple Agreement for Future Equity
One of the main advantages of using a SAFE is that it is a quick and easy way to raise money. SAFEs can be issued in a matter of days, whereas a traditional equity financing round can take weeks or even months to complete.Another advantage of using a SAFE is that it can help a company to avoid some of the costly and time-consuming aspects of the equity financing process, such as hiring a financial advisor or going through a due diligence process.One of the challenges of using a SAFE is that it can be difficult to predict how much money a company will raise. This is because the valuation cap is not set in stone and can change over time.Another challenge of using a SAFE is that it can delay the equity financing process. This is because the investor will not be able to convert the SAFE into equity until a later date, usually when the company raises money through a Series A financing round.
Here is an article outlining the pros and cons of SAFE agreements.
Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.
See Real SAFE Note Projects
Delaware Investing in Startup through Safe Note Review
- Delaware
- 3 lawyer bids
- $500 - $1,200
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Need help with a Simple Agreement for Future Equity?
Meet some of our Simple Agreement for Future Equity Lawyers
LeMont J.
LeMont leads a corporate and transactional practice with a focus on delivering practical, business-oriented legal solutions. His practice spans corporate law, commercial transactions, and real estate matters, advising clients through entity formation, governance, contract negotiation, acquisitions, and complex deal structuring. In the corporate and transactional space, LeMont counsels closely held businesses, startups, and growth-stage companies on formation strategy, operating agreements, shareholder arrangements, and day-to-day commercial contracting. He is known for structuring deals in a way that balances legal protection with operational flexibility, ensuring that agreements are both enforceable and commercially workable. His real estate practice includes representing clients in residential and commercial transactions, including purchases, sales, leasing arrangements, and hybrid structures such as rent-to-own and option-to-purchase agreements. He regularly works with clients to navigate deal risk, clarify ownership timelines, and document transactions to minimize future disputes.
"Hired LeMont for a compliance review — a claim I was about to print and an agreement I was about to sign. He asked good questions before starting instead of guessing at my facts, and one of them caught a real gap in my own draft. Where the law was unsettled he told me what he'd do rather than stopping at "it depends," which is the entire reason I hired a lawyer instead of trying to read the statutes myself. He also surfaced something my own research had missed entirely. He flagged an issue he could easily have billed me to analyze, and told me to wait until it was actually a problem. Delivered on time, at the flat fee quoted, no surprises. I'll be hiring him again."
Michael M.
www.linkedin/in/michaelbmiller I am an experienced contracts professional having practiced nearly 3 decades in the areas of corporate, mergers and acquisitions, technology, start-up, intellectual property, real estate, employment law as well as informal dispute resolution. I enjoy providing a cost effective, high quality, timely solution with patience and empathy regarding client needs. I graduated from NYU Law School and attended Rutgers College and the London School of Economics as an undergraduate. I have worked at top Wall Street firms, top regional firms and have long term experience in my own practice. I would welcome the opportunity to be of service to you as a trusted fiduciary. In 2022 and 2023, I was the top ranked attorney on the Contract Counsel site based upon number of clients, quality of work and number of 5 Star reviews.
"Michael's expertise and judgment impressed me. I brought him in for contract advisory work, and he quickly asked the questions I hadn't considered, identified the risks that mattered, and set aside the ones I had wrongly prioritized. He changed how I understood the contract. He is an excellent advisor - highly recommended."
Jane C.
Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.
"Jane was fantastic. She caught real gaps and fixed everything quickly and accurately. Highly recommend!"
Jeff C.
Experienced and broad based corporate/business attorney and Outside General Counsel (OGC), for start-ups, small businesses and growing companies of all sizes, advising and assisting clients with corporate and LLC formation, contracts and agreements, internet and terms of use/service agreements, trademarks and intellectual property protection, the purchase and sale of businesses (M&A), labor and employment matters, compliance and risk management, corporate governance, and commercial leasing matters. See other reviews on my website at www.ogcservices.net/reviews
"Jeff is quick, responsive and his work is excellent. I had a great experience, wouldn't hesitate to use his services again."
Rene H.
I am an attorney licensed in both California and Mexico. I offer a unique blend of 14 years of legal expertise that bridges the gap between diverse legal landscapes. My background is enriched by significant roles as in-house counsel for global powerhouses such as Anheuser-Busch, Campari Group, and Grupo Lala, alongside contributions to Tier 1 law firms. I specialize in navigating the complexities of two pivotal areas: AI/Tech Innovation: With a profound grasp of both cutting-edge transformer models and foundational machine learning technologies, I am your go-to advisor for integrating these advancements into your business. Whether it's B2B or B2C applications, I ensure that your company harnesses the power of AI in a manner that's not only enterprise-friendly but also fully compliant with regulatory standards. Cross-Border Excellence: My expertise extends beyond borders, with over a decade of experience facilitating cross-border operations for companies in more than 20 countries. I am particularly adept at enhancing US-Mexico operations, ensuring seamless and efficient business transactions across these territories.
"Rene gets the job done in an effective and efficient manner. Rene understood the goals of the project I hired him for; delivered and reached those goals with his knowledge and experience; as well as consistently following up on time, and is pleasant to work with."
June 18, 2025
Laura C.
Serving the Greater New Orleans Westbank, Laura brings a unique blend of legal expertise and technical regulatory experience to individuals and small businesses navigating complex legal challenges. With a Juris Doctorate from Loyola College of Law’s Civil Law Night Program (2017) and a Bachelor of Science in Civil Engineering from the University of New Orleans (2011), Laura offers grounded, strategic legal support rooted in real-world problem-solving. Prior to practicing law, Laura spent over a decade at the U.S. Department of the Interior, focusing on environmental and safety regulatory enforcement for offshore oil and gas operations. There, she led compliance reviews, developed policy, mediated between federal experts and industry representatives, and presented at major professional conferences on exploration, development, and environmental planning. This experience has instilled a deep understanding of complex regulatory frameworks and strong negotiation skills—assets to any client. Laura also served as Vice President of her union local, where she advocated for federal employees in disciplinary matters, negotiated workplace policy changes, and secured ADA accommodations—experience that informs her empathetic, client-centered approach to employment and family law.
JOSEPH R.
June 20, 2025
JOSEPH R.
Since starting as a Wall Street lawyer in 2004, I have led and closed 100's of transactions ranging from small business acquisitions to multi-billion-dollar domestic and international deals as well as private capital raises large and small. With over 20 years of experience in corporate, M&A, and securities law, I provide strategic legal counsel tailored to high-stakes business initiatives as well as critical advice to startups and companies raising capital. 🔴CORE PRACTICE AREAS: Capital Raising: Structuring and preparing Private Placement Memorandums (PPMs), SAFE Notes, Convertible Notes, Promissory Notes, Bridge Notes, Warrants, Reg A, Reg CF, Reg D, and Reg S offerings. Business Transactions: Representing buyers and sellers in domestic and cross-border M&A. Startups and Growth-Stage Businesses: Formation, structuring, scaling, and preparing businesses for investment or acquisition. Exit Planning: Legal strategy and execution for business sales and investor exits. Strategic Advisory: Advising boards of directors, C-suite executives and founders on overall business strategy and business acquisition/disposition matters. 🔴LEGAL EXPERTISE: Structuring and negotiating complex M&A and capital markets transactions. Drafting core transactional documents: purchase agreements, subscription agreements, operating/shareholder agreements, and corporate governance materials. Advising on securities compliance, including Reg A, Reg D, and Reg S offerings, Blue Sky compliance, and SEC filings. Fund formation and structured finance: extensive experience with CDOs, CMBS/RMBS, and Investment Company Act issues. Partnering with senior management and boards to align legal strategies with business objectives. Collaborating with international counsel and multidisciplinary teams on multijurisdictional deals. 🔴TRACK RECORD: Former Senior Associate Attorney at international Corporate M&A powerhouse Clifford Chance and top Corporate & Structured Finance law firm Thacher Proffitt & Wood both in Manhattan (New York City), where I represented investment banks, public and private companies, private equity sponsors, startups and hedge funds on strategic transactions. Closed and supported multi-billion-dollar deals across industries and jurisdictions. Delivered practical legal solutions to drive successful outcomes for clients ranging from startups to global financial institutions. I am licensed to practice law in New York and Texas. Corporate & Securities Attorney | Strategic Deal Advisor | M&A and Capital Raising Specialist
Find the best lawyer for your project
Browse Lawyers NowLawyer Reviews for Simple Agreement for Future Equity Projects
SAFE NOTE FOR LLC (LLC is registered in Missouri but doing business in California)
"Excellent service!!"
Review and finalize a Y Combinator post-money SAFE (cap-only) + Accredited Investor Questionnaire + 506(c) Risk Disclosure for a Delaware C-corp 506(c) raise.
"Scott is a breathe of fresh air in a world of hot air."
Create SAFE Agreement
"Zach did great work with quick turn-around and was super responsive. Thanks Zach!"
SAFE + Token Warrant Review and Securities/Howey Compliance Questions for Crypto Seed Round
"Thorough, precise legal work. Delivered clear, well-cited answers across a genuinely complex mix of SAFE, securities, and crypto-specific questions. Highly recommend."
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
View Trustpilot ReviewNeed help with a Simple Agreement for Future Equity?
Financial lawyers by top cities
- Austin Financial Lawyers
- Boston Financial Lawyers
- Chicago Financial Lawyers
- Dallas Financial Lawyers
- Denver Financial Lawyers
- Houston Financial Lawyers
- Los Angeles Financial Lawyers
- New York Financial Lawyers
- Phoenix Financial Lawyers
- San Diego Financial Lawyers
- Tampa Financial Lawyers
Simple Agreement for Future Equity lawyers by city
- Austin Simple Agreement for Future Equity Lawyers
- Boston Simple Agreement for Future Equity Lawyers
- Chicago Simple Agreement for Future Equity Lawyers
- Dallas Simple Agreement for Future Equity Lawyers
- Denver Simple Agreement for Future Equity Lawyers
- Houston Simple Agreement for Future Equity Lawyers
- Los Angeles Simple Agreement for Future Equity Lawyers
- New York Simple Agreement for Future Equity Lawyers
- Phoenix Simple Agreement for Future Equity Lawyers
- San Diego Simple Agreement for Future Equity Lawyers
- Tampa Simple Agreement for Future Equity Lawyers
ContractsCounsel User
create a S.A.F.E. Note
Location: Florida
Turnaround: Less than a week
Service: Drafting
Doc Type: SAFE Note
Number of Bids: 4
Bid Range: $695 - $1,350
User Feedback:
ContractsCounsel User