A SAFE has no valuation cap and no discount. Should I ever sign it?
Almost never as a founder, because an uncapped, undiscounted SAFE means the investor is taking early risk but getting priced at whatever your next round sets, which is bad for them and a red flag for you. If an angel offers it, they either don't understand the instrument or are being lazy, so push for a cap that reflects real early risk. The only time it makes sense is a tiny cheque from a friend who genuinely just wants to back you and isn't optimizing returns.
Go deeper
3 resources, 3 link-checked.
🛠️ Tool
✓ Link checkedFreeIntermediate
The primary source for the SAFE itself, plus YC's plain-English primer explaining post-money mechanics. Use the official document, not a random copy, and read the primer before you sign.
This is the worked dilution example, actual numbers, not a hand-wave: a $100k SAFE with an $8M cap and a 15% discount converting into a round priced at $0.909 per share, showing the discount price ($0.77265) versus the cap price ($0.72727), why the cap wins, and the exact 137,500 shares issued. Change the inputs to your own cap and you can compute your dilution before you sign.
100X.VC pioneered the iSAFE, India's answer to the US SAFE, and offers the standardized document plus a plain explanation. Indispensable for any Indian founder raising their first cheques the local way.
