������Ƶ

A Simple Agreement for Future Equity (SAFE) lets startups raise quick funding without immediately setting a company valuation or issuing shares. It's essentially a promise to give investors equity later, usually when the company raises a proper funding round or gets acquired. In Saudi Arabia, SAFEs have gained popularity among tech startups operating under the Kingdom's Vision 2030 innovation initiatives.

The key advantage of a SAFE is its simplicity compared to traditional investment contracts. Investors provide capital now and automatically receive shares later at a pre-agreed discount. While not explicitly mentioned in Saudi Companies Law, SAFEs typically comply with Shariah principles when properly structured and have become a practical tool for early-stage funding in the Kingdom's growing startup ecosystem.

Use a Simple Agreement for Future Equity when your Saudi startup needs quick capital but isn't ready for a formal valuation. This works especially well during your seed stage, when traditional equity rounds might be too complex or expensive. It's particularly useful for tech companies and innovative ventures aligned with Vision 2030 goals who need to move fast and keep legal costs low.

The timing makes sense when you're expecting a larger funding round within 12-24 months. Many Saudi angel investors and early-stage venture funds now prefer SAFEs because they simplify the investment process. Just ensure your agreement follows Shariah-compliant structuring and includes clear triggers for equity conversion under local corporate laws.

• Cap SAFEs: Set a maximum valuation for converting investment to equity, protecting investors from extreme dilution. Popular among Saudi tech accelerators and early-stage VCs.
• Discount SAFEs: Offer investors shares at a reduced price compared to the next funding round, typically 10-30% lower. Common in Saudi's startup ecosystem.
• MFN (Most Favored Nation) SAFEs: Automatically grant investors the best terms offered to future SAFE holders. Helps build trust with early supporters.
• Shariah-Compliant SAFEs: Modified to align with Islamic finance principles, using profit-sharing structures instead of interest-based components.

• Startup Founders: Sign SAFEs to secure quick funding without immediate equity dilution, often during early development stages aligned with Vision 2030 innovation goals.
• Angel Investors: Provide capital through SAFEs to get early access to promising Saudi startups while deferring complex valuation discussions.
• Legal Counsel: Draft and review agreements to ensure Shariah compliance and protection of both parties' interests under Saudi corporate law.
• Venture Capital Firms: Use SAFEs for rapid deployment of seed funding across their Saudi startup portfolio.
• Corporate Officers: Execute and manage SAFEs as part of their company's capital raising strategy.

• Company Details: Gather your Saudi commercial registration number, business address, and authorized signatory information.
• Investment Terms: Define the investment amount, valuation cap, and any discount rate that complies with Shariah principles.
• Conversion Triggers: Specify events that will convert the SAFE into equity, like future funding rounds or acquisition.
• Shareholder Rights: Document any special rights or restrictions under Saudi Companies Law.
• Documentation: Prepare board resolutions authorizing the SAFE issuance and ensure alignment with your articles of association.
• Template Selection: Use our platform to generate a Shariah-compliant SAFE template customized for Saudi Arabia's legal framework.

• Party Information: Full legal names, addresses, and commercial registration details of the startup and investor.
• Investment Terms: Purchase amount, valuation cap, and discount rate structured in Shariah-compliant language.
• Conversion Mechanics: Clear triggers for equity conversion and calculation methods under Saudi corporate law.
• Rights Declaration: Investor rights, voting provisions, and information access aligned with local regulations.
• Exit Provisions: Terms for company sale, dissolution, or IPO scenarios.
• Governing Law: Explicit reference to Saudi law and Shariah compliance requirements.
• Signature Block: Authorized signatory details and corporate seal requirements.

A Simple Agreement for Future Equity (SAFE) differs significantly from a standard Equity Agreement in several key ways, particularly in the Saudi business context. While both documents deal with company ownership, their timing and structure serve different purposes.

• Immediate Effect: An Equity Agreement creates instant shareholding, while a SAFE only promises future equity conversion.
• Valuation Requirements: SAFEs deliberately avoid current company valuation, making them ideal for early-stage Saudi startups. Equity Agreements require immediate valuation.
• Shareholder Rights: SAFE holders typically have no voting or governance rights until conversion, unlike immediate rights in Equity Agreements.
• Complexity Level: SAFEs are intentionally simpler, requiring less negotiation and legal work under Saudi Companies Law.
• Regulatory Treatment: Equity Agreements must meet full Saudi ownership transfer requirements, while SAFEs face lighter regulation as conditional instruments.