Guides · Updated 2026-10-16T00:00:00.000Z
SAFE vs Convertible Note: What's the Difference?
SAFEs and convertible notes both let you raise money now and set the share price later, usually at your next priced round. They differ in a few ways that matter.
The short answer
| SAFE | Convertible note | |
|---|---|---|
| Legal form | Contract for future equity | Debt |
| Interest | None | Typically accrues interest |
| Maturity date | None | Yes; can be called or must be renegotiated |
| Valuation cap | Usually | Usually |
| Discount | Sometimes | Often |
| Paperwork | Short, standard form | Longer, more negotiable |
What is a SAFE?
A SAFE (Simple Agreement for Future Equity) was created by Y Combinator as a simpler alternative to convertible notes. The investor gives you money; you promise them shares when you raise a priced round, at a price set by a valuation cap, a discount, or both. There’s no interest and no repayment date.
Most SAFEs today are post-money SAFEs, where the cap includes the SAFE money. That makes ownership easy to calculate: investment ÷ post-money cap. Try it in our SAFE calculator.
What is a convertible note?
A convertible note is a loan that converts into equity at the next priced round. Because it’s debt, it carries an interest rate (the interest usually converts into shares too) and a maturity date. If you haven’t raised a priced round by the maturity date, the investor could technically ask for repayment, though most extend the note instead.
Which should you use?
- SAFEs are the default for US pre-seed and seed rounds because they’re fast, cheap and standard.
- Convertible notes are still common in some regions and with some angel groups, and investors who want debt-like protections prefer them.
Whichever you use, track how much ownership you’re promising. Several SAFEs at modest caps can add up to a large share of the company before you ever price a round. Model it with the dilution calculator, and have a startup lawyer review anything non-standard.
This guide is general information, not legal or financial advice.