What is a Safe and what is a convertible note?

Safes and convertible notes are the most popular fundraising instruments used by early stage startups to raise capital from angel investors, venture capital firms and other accredited investors.

A convertible note is simply a promissory note that is convertible into stock. The note specifies when and on what terms the note converts into stock.

The Safe is a popular fundraising instrument developed by Y Combinator that resembles a convertible note, but does not have an interest rate or a maturity date. This simplifies things for both the company and for the investor. Like a convertible note, a Safe specifies when and on what terms the Safe converts into stock.

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