Dear SaaStr:  Is it OK to Modify the Standard SAFE Form?

There’s an issue I see blow up several times now as an investor.  It’s when a founder takes a so-called standard SAFE … and modifies it, and doesn’t really tell the investors it is sent to.  Here’s what I’ve seen over the years:

  • Removing antidilution protection
  • Converting to last round security, not next round
  • Converting to common, not next round security / preferred
  • No premium / no return if company acquired before conversion
  • Allowing unilateral amendment of the terms by the company
  • Etc. etc.

A standard SAFE note isn’t all that safe, for founders or investors — but it is fast and simple.  That’s its beauty.

But with that comes a large degree of trust.  Trust that the SAFE at least is “standard”.  Especially because investors rarely review a SAFE, and almost never get a redline of any changes made.  If you change the standard terms, most investors will never know.

Changing standard terms without telling investors explicitly?  I think it’s wrong, because it breaches trust.  If you do change the terms — let your investors clearly know what’s changed vs. the standard forms.  And importantly, let any larger investors know to feel free to have it reviewed by legal.

Or … just don’t change the standard terms.

(little changes image from here)

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