Document background
The SAFE (Simple Agreement for Future Equity) Agreement has become increasingly popular in the Australian startup ecosystem as a streamlined investment instrument for early-stage companies. Originally developed by Y Combinator but adapted for Australian legal requirements, this agreement provides a balanced solution for companies seeking capital without immediately setting a valuation or issuing equity. The document is particularly useful for pre-seed and seed funding rounds, where traditional equity rounds might be premature or impractical. It includes essential provisions compliant with Australian corporate law, including sophisticated investor requirements under the Corporations Act 2001, and typically features a valuation cap and/or discount rate for future conversion events. The SAFE Agreement helps companies avoid the complexity and immediate dilution of equity rounds while providing investors with clear rights to future equity.
