{"id":444,"date":"2025-06-23T20:26:00","date_gmt":"2025-06-23T18:26:00","guid":{"rendered":"https:\/\/swedishventures.se\/?post_type=glossary&#038;p=444"},"modified":"2025-07-02T13:56:40","modified_gmt":"2025-07-02T11:56:40","slug":"safe-note","status":"publish","type":"glossary","link":"https:\/\/swedishventures.se\/en\/glossary\/safe-note\/","title":{"rendered":"SAFE Note"},"content":{"rendered":"\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>A SAFE note (Simple Agreement for Future Equity) is a financial instrument used by startups to raise capital from investors without immediately determining the company&#8217;s valuation. It was introduced by Y Combinator in 2013 as a simpler alternative to convertible notes.<\/p>\n\n\n\n<p><strong>How SAFE Notes Work:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Investor Agreement \u2013 An investor provides funding in exchange for the right to receive equity in the future.<\/li>\n\n\n\n<li>Trigger Event \u2013 SAFE notes convert into shares when a qualifying event occurs, such as a priced equity round or the sale of the company.<\/li>\n\n\n\n<li>Valuation Cap &amp; Discount Rate \u2013 Investors may receive shares at a discounted price or based on a valuation cap, ensuring they get favorable terms compared to later investors.<\/li>\n\n\n\n<li>No Interest or Maturity Date \u2013 Unlike convertible notes, SAFE notes do not accrue interest and do not have a repayment deadline.<\/li>\n<\/ol>\n\n\n\n<p><strong>Advantages of SAFE Notes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Simple &amp; Cost-Effective \u2013 Less paperwork and legal complexity compared to traditional funding agreements.<\/li>\n\n\n\n<li>Flexible for Startups \u2013 Allows startups to raise funds without setting a valuation too early.<\/li>\n\n\n\n<li>Investor-Friendly \u2013 Provides early investors with potential upside through valuation caps and discounts.<\/li>\n<\/ul>\n\n\n\n<p><strong>Risks &amp; Considerations:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Dilution \u2013 Founders may experience dilution when SAFE notes convert into equity.<\/li>\n\n\n\n<li>Uncertain Timing \u2013 Investors must wait for a triggering event before receiving shares.<\/li>\n\n\n\n<li>Legal &amp; Tax Implications \u2013 SAFE notes may have different tax treatments depending on jurisdiction.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p style=\"font-size:10px\"><em>Written by Swedish Ventures, Rolf Olsson. Remarks to this article could be sent to glossary@swedishventures.se <\/em><\/p>\n\n\n\n<p style=\"font-size:10px\">ASO: DD-01-06<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A SAFE note (Simple Agreement for Future Equity) is a financial instrument used by startups to raise capital from investors without immediately determining the company&#8217;s valuation. It was introduced by Y Combinator in 2013 as a simpler alternative to convertible notes. How SAFE Notes Work: Advantages of SAFE Notes: Risks &amp; Considerations: Written by Swedish [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"parent":0,"template":"","glossary-cat":[16],"class_list":["post-444","glossary","type-glossary","status-publish","hentry","glossary-cat-dd-cap-table-docs"],"blocksy_meta":[],"aioseo_notices":[],"related_terms":"","external_url":"","internal_reference_id":"","_links":{"self":[{"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/glossary\/444","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/users\/5"}],"version-history":[{"count":3,"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/glossary\/444\/revisions"}],"predecessor-version":[{"id":977,"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/glossary\/444\/revisions\/977"}],"wp:attachment":[{"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/media?parent=444"}],"wp:term":[{"taxonomy":"glossary-cat","embeddable":true,"href":"https:\/\/swedishventures.se\/en\/wp-json\/wp\/v2\/glossary-cat?post=444"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}