When does a SAFE convert, and what triggers it?
A SAFE converts when a trigger event in the document happens. It does not convert on a date, and it does not convert because time has passed. Until a trigger fires, the holder has no shares and no vote.
The three standard triggers
Equity financing. You raise a priced round and the SAFE converts into shares at its cap or discount price. This is the common one, and the one most SAFEs are written for.
Liquidity event. A sale of the company, a change of control, or an IPO. The holder can usually choose between taking their money back and converting to shares first.
Dissolution. The company winds up. The holder is paid from what is left, ahead of common shareholders and behind creditors.
Convertible notes add a fourth
Maturity. If the note reaches its maturity date without a round, the terms decide whether it extends, converts at a set price, or is repaid.
Before it converts
An unconverted SAFE is not a shareholding. It does not appear in your outstanding share count, and it does appear in your fully diluted view.