A SAFE (simple agreement for future equity) is a standardized document used by startup companies for early-stage fundraising. A SAFE investment may convert to equity in the company in a future round of fundraising (Series A, for example) and does not give a SAFE investor a specific number of shares at the time of the investment. The price of shares owned by a SAFE investor are determined in the future round of fundraising.

The terms of a SAFE are intended to be balanced between the interests of the investors, and the founders or existing owners of the company, but a SAFE may not be appropriate for every early-stage company or investor.

The SAFE was created by Y Combinator, a well-known tech accelerator, in 2013.

In Maryland, as in other states, a SAFE (simple agreement for future equity) is a financial instrument used by startups during early-stage fundraising. It allows investors to convert their investment into equity at a later date, typically during a future equity financing round such as Series A. The terms of a SAFE are not standardized by law but were created by Y Combinator in 2013. The use of SAFEs in Maryland is subject to general contract law and securities regulations. Founders and investors must ensure that the use of a SAFE complies with federal securities laws and any relevant state securities regulations. This may include the need to file appropriate notices with the Securities and Exchange Commission (SEC) and the Maryland Securities Division. Since a SAFE does not provide immediate equity or promise a specific number of shares, it is crucial for both parties to understand the terms and potential risks involved. Founders and investors in Maryland considering a SAFE should consult with an attorney to ensure that the agreement is fair, clear, and complies with all applicable laws.