The SAFE investor receives the future shares when a priced round of investment or liquidity event occurs.
In return, the investor receives stock in the company at a later date, in connection with specific, contractually agreed on liquidity events.
The primary trigger is generally the sale of preferred shares by the company, typically as part of a future priced fund-raising round.
Y Combinator released the Simple Agreement for Future Equity ("SAFE") investment instrument as an alternative to convertible debt in late 2013.
[7] Institutional investors are likewise at risk in scenarios where SAFEs do not come attached to standard control terms such as pro rata or liquidation preferences.