Simple Agreement for Future Equity #
Here are four (4) general concepts that are useful to understand with a SAFE (Simple Agreement for Future Equity). For further reading see sec-safe-def and stock-types.
Conversion terms. These are the specific terms by which the amount you invested in the SAFE gets converted into equity. For instance, the terms might explain whether it’s just your original investment that converts.
Repurchase rights. There may be provisions in the SAFE that allow the company to repurchase your future right to equity instead of it being converted to equity.
Dissolution rights. You need to know what happens to your SAFE and the money you invested if the company ends up dissolving.
*Voting rights. SAFEs do not represent current equity stakes in the company, and so do not provide you with voting rights similar to common stock. But there may be particular circumstances mentioned in the SAFE that allow you a voice on matters pertaining to your SAFE.