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A Simple Agreement for Future Equity (SAFE) lets startups raise money from investors now while delaying the formal share valuation until later. It's a popular alternative to convertible notes in New Zealand's startup ecosystem, offering simpler terms and less paperwork than traditional investment agreements.

Under a SAFE, investors provide funding immediately and receive the right to convert their investment into company shares during the next funding round or specific trigger event. This approach helps Kiwi founders access early-stage capital without the complexity of setting a company valuation or dealing with interest payments, while still giving investors potential upside in the company's future success.

Use a Simple Agreement for Future Equity when your startup needs quick access to capital but isn't ready to set a firm company valuation. This flexible funding tool works especially well for early-stage Kiwi companies raising their first round of external investment, particularly when traditional equity rounds feel too complex or expensive.

SAFEs make the most sense during seed funding or bridge rounds, when you need to move quickly and keep legal costs low. They're particularly valuable when you've got interested investors but expect a larger funding round within 12-18 months. The agreement's simplicity appeals to both first-time founders and experienced angel investors in New Zealand's startup ecosystem.

• Safe Equity Agreement: The standard New Zealand version includes key provisions for valuation caps, discount rates, and conversion triggers. Most Kiwi startups use this base template and modify the valuation cap (limiting the conversion price), discount rate (offering early investors better terms), and specific conversion events (like qualified financing rounds or company sales). Some include "most favored nation" clauses to match future better terms, while others add specific provisions for pro-rata rights or participation in future rounds.

• Startup Founders: Create and propose SAFEs to raise capital while maintaining control of their companies during early stages. They typically work with lawyers to customize terms that protect their interests.
• Angel Investors: Provide funding through SAFEs to get early access to promising Kiwi startups, often investing between $20,000 and $200,000 per deal.
• Legal Advisors: Draft and review SAFE agreements to ensure compliance with New Zealand securities laws and protect both parties' interests.
• Investment Networks: Often facilitate SAFE-based deals between their member investors and vetted startups.

• Company Details: Gather your company registration number, shareholding structure, and current valuation methodology.
• Investment Terms: Decide on the investment amount, valuation cap, and any discount rate you'll offer investors.
• Trigger Events: Define what constitutes a qualifying funding round or exit event that will convert the SAFE into equity.
• Investor Information: Collect full legal names, addresses, and investment entity details (if not investing personally).
• Future Planning: Consider your next funding round timeline and how these SAFE terms might affect it.

• Investment Terms: Clear statement of purchase amount, valuation cap, and any discount rate applied.
• Conversion Mechanics: Detailed conditions triggering equity conversion, including qualifying financing rounds and calculation methods.
• Company Details: Full legal name, registration number, and registered office address of the issuing company.
• Investor Rights: Specific rights granted before conversion, including information rights and pro-rata participation rights.
• Exit Provisions: Treatment of the SAFE in case of company sale, IPO, or dissolution.
• Governing Law: Explicit statement that New Zealand law governs the agreement.

The key distinctions between a Simple Agreement for Future Equity (SAFE) and an Equity Agreement matter significantly for Kiwi startups. While both involve company ownership, they serve different purposes and timing needs.

• Immediate vs. Future Rights: SAFEs promise future equity without immediate shareholding, while Equity Agreements create instant ownership with immediate shareholder rights.
• Valuation Requirements: SAFEs defer valuation until a future funding round, making them ideal for early-stage startups. Equity Agreements need an agreed company valuation upfront.
• Complexity Level: SAFEs typically use simpler terms and shorter documents, whereas Equity Agreements require detailed shareholder rights, voting powers, and exit provisions.
• Cost and Speed: SAFEs offer faster execution and lower legal costs, making them popular for seed rounds. Equity Agreements involve more extensive negotiation and higher legal expenses.