What is a SAFE, and how is it different from a convertible note?
A SAFE, or Simple Agreement for Future Equity, is an investment that buys the right to shares later rather than shares now. A convertible note does the same job, structured as a loan. Both turn into equity when you raise a priced round.
What is different
A SAFE is not debt. There is no interest, no maturity date and no obligation to repay. If you never raise, it sits there.
A convertible note is debt. It carries an interest rate and a maturity date, and the interest that accrues usually converts into shares alongside the principal. If the note reaches maturity with no round, the document decides what happens next: extend, convert at a set price, or repay.
What is the same
Both carry the same economic terms. A valuation cap, a discount, or both. Both sit outside your outstanding share count until something triggers conversion, and both appear in your fully diluted view before that happens.
Which one you will see
At pre-seed and seed, the SAFE is often the one you will be handed. Founders tend to prefer it, because it is faster and cheaper to paper and there is no maturity clock ticking. Investors more often ask for a note when they want the protection that maturity and interest give them.