Since investors only buy the right to get preferred stock during a financing round, there's no interest rate. Y-Combinator partner and attorney Carolynn Levy made it short and standardized. SAFE, the Simple Agreement for Future Equity, is a seed-stage financing tool that provides a faster, less expensive alternative to convertible debt financing.A valuation discount gives the first investor a discount on the share price decided in the IPO.A valuation cap converts an investor's loan into shares when the share price reaches a maximum value.They often have friends and family clauses that include MFN agreements. A friends and family round is a financing round for only friends and family.Disagreements between founders and investors over most favored nation clauses often lead to lawsuits.They also can't offer better terms than the investors during the first round of financing received.
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