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A SAFE note, or Simple Agreement for Future Equity, is a contract that allows an investor to buy shares in a company without establishing a valuation. The investor gives money to the startup knowing that said startup will raise more funding in the future when their valuation is better defined. In the future, when a professional investor does a comprehensive financial analysis and comes up with the Valuation for the company – the SAFE note investors can convert their SAFE notes into Preferred shares of the company at the same valuation – but with an extra discount or reward for being an early investor.
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Ever wondered why some companies stay under the control of their founders, while others shift into the hands of their investors? Our Cap Table Templat...
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A SAFE note, or Simple Agreement for Future Equity, is a contract that allows an investor to buy shares in a company without establishing a valuation. The investor gives money to the startup knowing that said startup will raise more funding in the future when their valuation is better defined. In the future, when a professional investor does a comprehensive financial analysis and comes up with the Valuation for the company – the SAFE note investors can convert their SAFE notes into Preferred shares of the company at the same valuation – but with an extra discount or reward for being an early investor.
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