n Without Prejudice - Demystifying the "SAFE" : company law

Volume 16, Issue 1
  • ISSN : 1681-178X



What is SAFE? The SAFE - Simple Agreement for Future Equity - has emerged in the South African investment environment as abuzz word. Introduced in December 2013 by a Silicon Valley seed funder, the instrument is gaining traction in South Africa as a means of raising seed capital and growth finance for start-ups. In traditional lending and investment models, start-up founders often find themselves losing or compromising flexibility in running their businesses. Generally, an investor has a right to influence and participate in business decisions. Loan finance may require debt repayments irrespective of the cash flow position of the business and debt conversions to equity may have little correlation to the underlying value of the business.

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