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Pre-Money Investment SAFE

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PRE-MONEY INVESTMENT SAFE

This Pre-Money Investment SAFE (the "SAFE") is made as of between Company Name: (the "Company"), and Investor Name: (the "Investor").

1. Investment

1.1 Purchase. Subject to the terms of this SAFE, the Investor agrees to provide capital to the Company in the aggregate principal amount of US$ (the "Purchase Amount") in exchange for the right to certain equity interests of the Company upon a Triggering Event as set forth below.

1.2 No Interest; No Equity Until Conversion. This SAFE is not a debt instrument, does not accrue interest, and does not by itself entitle the Investor to any shares or voting rights until conversion in accordance with Section 3.

2. Definitions

"Equity Financing" means a bona fide transaction or series of related transactions pursuant to which the Company issues and sells Preferred Stock for aggregate gross proceeds of at least US$ .

"Liquidity Event" means a Change of Control of the Company or an initial public offering of the Company's securities.

3. Conversion Upon Equity Financing

3.1 Conversion. Upon the closing of an Equity Financing, the Purchase Amount will automatically convert into the number of shares of the Preferred Stock issued in such Equity Financing equal to the Purchase Amount divided by the Conversion Price. "Conversion Price" shall be the lower of:

(a) the price per share equal to the Valuation Cap divided by the Company's Fully Diluted Capitalization immediately prior to the Equity Financing; or (b) the price per share equal to the price per share paid by the purchasers in the Equity Financing multiplied by (1 minus the Discount Rate).

4. Economic Terms

4.1 Optional Provisions. Select applicable optional provisions:

Valuation Cap applies    Discount applies    Most-Favored-Nation (MFN) provision applies

5. Liquidity Event

5.1 If there is a Liquidity Event prior to conversion under Section 3, the Investor will receive, at the Investor's election, either: (a) a cash payment equal to the Purchase Amount (subject to the Company's available assets), or (b) automatically convert the Purchase Amount into common stock at the Conversion Price. The Company's obligation to pay cash in a dissolution or liquidation is subordinate to all creditor claims.

6. Company Representations and Warranties

The Company represents and warrants that: it is duly organized and in good standing under applicable law; execution and delivery of this SAFE and performance will not violate its organizational documents or agreements; and the proceeds from the Purchase Amount will be used for general corporate purposes. The Company further represents that, to its knowledge, all corporate approvals necessary to authorize the execution, delivery and performance of this SAFE have been obtained.

7. Investor Representations and Warranties

The Investor represents that it has full power to enter into this SAFE, that it is acquiring this SAFE for investment for its own account and not with a view to distribution, and that it has had the opportunity to obtain information regarding the Company and has had the opportunity to ask questions and receive answers deemed necessary to evaluate the investment. The Investor understands the speculative nature of early-stage investments.

8. Transfer; Assignment

This SAFE and the rights hereunder may not be assigned or transferred by the Investor without the prior written consent of the Company, which shall not be unreasonably withheld, except that the Investor may transfer to an affiliate or in connection with a transfer of substantially all of its assets. The Company may assign this SAFE in connection with a merger, consolidation or sale of substantially all of its assets.

9. Miscellaneous

9.1 Governing Law. This SAFE shall be governed by and construed in accordance with the laws of the State of without regard to conflict of law principles.

9.2 Amendment and Waiver. Any term of this SAFE may be amended or waived only with the written consent of the Company and the Investor.

9.3 Notices. Notices hereunder shall be in writing and delivered to the addresses below. Notices are effective upon receipt.

10. Survival

All representations, warranties and covenants made in this SAFE shall survive the execution and delivery of this SAFE to the extent necessary to effectuate the purposes of this SAFE.

Company Printed Name:

By:

Date:

Title:

Investor Printed Name:

By:

Date:

Title (if applicable):

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What a Pre-Money Investment SAFE Is and when it applies

A Pre-Money Investment SAFE (Simple Agreement for Future Equity) is an investor contract used by startups to take capital in exchange for the right to receive equity at a later equity financing event. It records the investment amount, any valuation cap or discount, conversion mechanics, and basic investor protections without setting a fixed share price at signing. SAFEs are commonly used in seed-stage financings because they are simpler than priced equity rounds and avoid immediate valuation negotiations while documenting investor terms and future conversion triggers.

Why teams and investors use a Pre-Money Investment SAFE

A SAFE streamlines seed investments by documenting economic upside and conversion mechanics without negotiating share price. It reduces legal complexity, accelerates closing, and preserves flexibility for both founders and investors while making conversion events and investor protections explicit.

Why teams and investors use a Pre-Money Investment SAFE

Who commonly prepares and signs a Pre-Money Investment SAFE

Founders, angel investors, early-stage funds, and startup counsel typically prepare or accept SAFEs to document convertible equity economics quickly.

  • Early-stage founders negotiating seed capital and simple investor terms before a priced round.
  • Angel or seed investors seeking simple documentation of conversion rights and dilution protections.
  • Startup attorneys and in-house counsel who use standardized clauses to reduce drafting time.

The SAFE fits transactions where speed and simplicity matter more than immediate equity allocation; counsel and investor diligence remain recommended for complex or large financings.

Primary signers and their roles

Founder / CEO

The founder or authorized officer signs for the issuer. They confirm corporate authority, disclose capitalization details, and accept conversion mechanics on behalf of the company; board authorization is often required prior to signing.

Investor / Accredited

The investor signs to acknowledge purchase amount and terms, confirm investment accreditation where applicable, and agree to conversion events; investor counsel typically reviews tax and securities implications before execution.

Essential fields the SAFE must contain

Party Names: Full legal entity names
Investment Amount: Dollar amount invested
Valuation Cap: Cap expressed in dollars
Discount Rate: Percentage discount, if any
Conversion Trigger: Event that causes conversion
Governing Law: State selected for disputes

Concise risk items to watch for

Tax Reporting: Incorrect reporting risks penalties
Improper Authority: Unsigned or unauthorized signers invalidate terms
Missing Disclosures: Securities-law exposure possible
Valuation Errors: Unclear caps can harm investors
Ambiguous Triggers: Conversion timing disputes arise
Retention Failures: Loss of enforceable records

Common preparation mistakes to avoid

  • Leaving the governing law blank or inconsistent between exhibits, which can create disputes about which state law applies and increase litigation risk.
  • Using informal shorthand for investor names or entities, leading to mismatched records and difficulty enforcing conversion rights later.
  • Failing to document board approval or authorization for issuance, which can render the SAFE unenforceable or require ratification.
  • Not specifying conversion mechanics clearly (e.g., rounding, split shares), which causes disagreement during priced financing.

Step-by-step: completing a Pre-Money Investment SAFE

Follow these steps in order to ensure the SAFE records material terms clearly and is ready for signature and secure storage.

  • 01
    Prepare Parties: Enter full legal names and entity types.
  • 02
    Confirm Economics: Specify investment amount, cap, discount.
  • 03
    Set Triggers: Define conversion events and timeline.
  • 04
    Authorize Signature: Obtain board approval and signatures.

Recommended eSigning configuration for SAFEs

Configure signing workflows to capture identity, timestamping, and retention while minimizing friction for investors.

Field Configuration
Authentication Email link or SMS code
Audit Trail Enable IP, timestamp capture
Copies Send final PDF to all parties
Retention Export to secure repository

Typical digital signing flow for a SAFE

A clear eSignature flow reduces turnaround time and preserves an evidentiary record for future conversion or due diligence.

  • Upload: Sender uploads the SAFE PDF
  • Place Fields: Add signature, date, and initials
  • Send: Distribute secure signing links to parties
  • Complete: Signed copies and audit trail generated

Technical considerations for eSigning and storage

Choose an eSignature platform that supports secure authentication, ISO/SOC compliance, and practical integrations for document storage.

  • File formats: PDF, DOCX supported
  • Integrations: Salesforce, NetSuite, Google Workspace
  • Security: AES-256 at rest, TLS 1.2/1.3

Ensure the platform preserves an audit trail (IP, timestamps), supports role-based access, and offers export options for long-term retention and investor diligence.

eSignature vendor price and capability snapshot

Basic pricing and feature availability across common eSignature providers to help operational planning; signNow is listed first per vendor-comparison convention.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Core clauses to include in a professional SAFE

A clear SAFE contains the economic terms, conversion mechanics, investor rights, and administrative provisions needed for later equity conversion and diligence.

Parties

Identify issuer and investor with full legal names, entity types, and addresses so the agreement can be enforced and mapped to capitalization records during conversion.

Purchase Amount

State the precise dollar amount paid by the investor, how payment is delivered, and any escrow or wire instructions to avoid discrepancies.

Valuation Cap

If present, specify the dollar cap that will determine conversion price at a qualifying equity financing and how it interacts with discounts and other SAFEs.

Discount

If a discount applies, state the exact percentage and describe rounding, maximum conversion price, and priority rules relative to cap.

Conversion Terms

Define what constitutes a qualifying financing, optional conversion, or liquidity event, and include mechanics for share calculation and allocation.

Representations

Include investor and issuer representations (authority, accreditation, no public offering) and governing law for disputes and interpretation.

Practical signing scenarios for early-stage SAFEs

Two typical execution scenarios illustrate how SAFEs are completed and recorded in practice.

Founder scenario

A founder preparing a $50,000 seed SAFE uses a standard template to record a $5M cap and 20% discount

  • The founder secures board consent and sends the SAFE via secure link
  • The executed SAFE is stored with the capitalization table and shared with counsel for investor reporting and future financing diligence.

Investor scenario

An angel investor signs a SAFE on a phone after reviewing the issuer's disclosures

  • The investor confirms accreditation and funds by wire
  • The platform captures IP, timestamp, and a PDF certificate for the investor and issuer to retain for tax and audit purposes.

Frequently asked questions about Pre-Money SAFEs

Answers to common questions about enforceability, eSigning, notarization, and post-signature administration for SAFEs.


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