What are safes and convertible notes?

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

A convertible note is 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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