The Washington Simple Agreement for Future Equity (SAFE) is a financial instrument utilized in the startup ecosystem that allows companies to raise funding without determining a specific valuation. SAFE agreements were introduced as an alternative to traditional convertible notes, aiming to simplify and expedite early-stage investments. The Washington SAFE agreement provides investors with the right to obtain equity in a company in the future, typically during a priced equity round or a change in control event such as an acquisition or initial public offering (IPO). It entails an investment in the company's potential, rather than its present value. There are different types of SAFE agreements that can be used in Washington state, catering to various investment preferences and circumstances. Some of these variations include: 1. Standard SAFE: This is the most commonly used type of SAFE and your best bet if you're looking for a straightforward and widely accepted instrument. It provides investors with the right to acquire equity in a future priced round with pre-negotiated terms or during a predetermined change of control event. 2. Valuation Cap SAFE: This variation includes a valuation cap, which acts as a maximum value at which the conversion price can be calculated during a subsequent fundraising round. If the company's valuation exceeds the cap, SAFE investors enjoy the advantage of converting at a discounted price. It protects investors' interests by ensuring they receive the best possible deal. 3. Discount SAFE: A Discount SAFE offers investors a predetermined discount on the price per share investors will pay when SAFE converts into equity. This discount compensates investors for taking early-stage risks and encourages them to participate in funding rounds without explicit valuation. 4. MFN (Most Favored Nation) SAFE: The MFN SAFE includes a clause ensuring that if the company subsequently issues Safes with more favorable terms, the terms of existing MFN SAFE swill automatically be adjusted to match the new terms. It safeguards investors from missing out on advantageous terms offered to later investors. The Washington SAFE agreement provides flexibility and protection to both startups and investors during early funding stages. It allows startups to secure capital without immediate valuation negotiations, and investors benefit by obtaining the potential for future equity at advantageous terms while minimizing their short-term risk.