# Fundraising with SAFEs on Atlas FAQ _Atlas founders can fundraise using SAFEs from their Atlas dashboard, in the_ _**Fundraising**_ _tab. Founders can create, send, and track their SAFEs, which are pre-filled with their Atlas company details. Read about_ [_sending a SAFE with Atlas_](https://docs.stripe.com/atlas/fundraise-with-safes)_._ ## **SAFEs overview** ### **What are SAFEs?** Simple Agreements for Future Equity, or SAFEs allow you to raise money from investors by giving them the right to receive equity in your company when you later raise your first priced round or have a liquidity event. The SAFE was developed by [Y Combinator](https://www.ycombinator.com/documents#about) in 2013, and has since become a common way for early stage companies to raise money. ### **What are the different types of SAFEs?** There are multiple types of SAFEs. Three commonly used types are: 1. **Valuation cap**: Sets a maximum company valuation at which the SAFE converts into equity. According to data from Carta, this is the most used type of SAFE. * Example: You raise a $100,000 SAFE with a $5M valuation cap, and your next round is priced at $10M. The SAFE converts as if your company were valued at $5M, with the investor getting $100,000/$5,000,000 = 2% of your company rather than $100,000/$10,000,000 = 1% of your company. 1. **Discount:** Gives your investor a percentage discount on the price per share in your next priced round when their SAFE converts to equity. * Example: You raise a $100,000 SAFE with a 20% discount. When the next round prices shares at $1.00 each, the investor’s shares convert at $0.80 per share ($1.00*(1-20%), so the investor gets $100,000/$0.80 = 125,000 shares rather than $100,000/$1.00 = 100,000 shares. 1. **Valuation cap + discount:** Both sets a maximum company valuation at which the SAFE converts into equity, and gives your investor a discount on the price per share in your next priced round. The SAFE converts at whichever gives the investor the most equity in your business: the valuation cap or the discount. * Example: You raise a $100,000 SAFE with a $5M cap and a 20% discount. Your next round is priced at $10M and your shares are priced at $1.00. The SAFE converts based on the $5M cap because it gives them more shares than the 20% discount. * Discount calculation: 1. 20% discount on $1.00 = $0.80 1. $100,000/$0.80 = 125,000 shares * Valuation cap calculation: 1. share price at $5M cap = $5,000,000/$10,000,000 = $0.50 1. $100,000/ $0.50 = 200,000 shares ### How does a valuation cap work? A valuation cap is the maximum company valuation at which the SAFE converts into equity in your company. If your next priced round gives your company a higher valuation than the valuation cap of a SAFE, the SAFE investor receives shares in your company as if the company were valued at the valuation cap rather than the new, higher valuation. Their ownership will be calculated as their investment divided by the valuation cap, rather than their investment divided by the new valuation. This results in them getting a larger share of your company equity than they would if they did not have a valuation cap. If you raise money at a lower valuation than the valuation cap of a SAFE, the investor on that SAFE receives shares based on the new company valuation, rather than the valuation cap. **Do investors need to be ‘accredited’?** Lawyers recommend that SAFE investors are ‘accredited’. Raising from non-accredited investors is technically possible under certain exemptions, but it adds legal and administrative complexity, including detailed disclosure requirements and compliance with securities laws. For most early-stage startups, leading law firms for startups like Cooley [advise](https://www.cooleygo.com/can-you-raise-money-from-unaccredited-investors/) that costs and risks of raising from non-accredited investors outweigh the benefits. ## **Board consent** ### **Why does my board need to sign a board consent?** A company’s board of directors should authorize any fundraising, including SAFEs. Board consent is the formal record of your board’s approval. It ensures your company follows standard corporate governance procedures. ### **What do I do if I want to raise more than my board consent allows?** The Atlas board consent authorizes a specific amount of fundraising with SAFEs. If you try to raise more than what was approved, you’ll need to work with an attorney to update the fundraising maximum in your board consent. To avoid working with an attorney, set a maximum raise amount in Atlas that is higher than what you anticipate you’ll need to fundraise, giving yourself a buffer in case you later decide to raise more. ### **Can I obtain board consent in retrospect after collecting funds?** Lawyers recommend obtaining board authorization prior to fundraising. ## **Fundraising with Atlas SAFEs** ### **Who can use Atlas SAFEs?** Any founder with a US C Corp formed on Atlas after June 10th, 2024 can use Atlas SAFEs. ### **Does an Atlas board consent cover past SAFE fundraising?** No, the Atlas-generated board consent document only covers future fundraising. If you want to secure board consent for fundraising that has already taken place off Atlas, consult a lawyer. ### **Do Atlas SAFEs support SAFEs with valuation caps and discounts?** Atlas currently only supports SAFEs with valuation caps, the most commonly used form of SAFE. We’re working on offering SAFEs with discounts. ### **Who created the SAFE template offered by Atlas?** Atlas SAFEs use the industry-trusted post-money Y Combinator (YC) template.   “Post-money” means the SAFE investor’s ownership is calculated as a percentage of the company after their SAFE and all other issued SAFEs have converted, and the investment is included in the company valuation used for this calculation. For instance, if you raise a $500K SAFE on a $5M post-money valuation, your investor will own 10% of the company after conversion. ### **Can I send a SAFE to individual and institutional investors, like VCs?** Yes. You can send Atlas SAFEs to individuals and institutional investors. ### **How do I correct a mistake in a SAFE, like an incorrect name or investment amount?** If you discover a mistake in a SAFE that you’ve already sent to an investor, you can void it from your dashboard: 1. In your Atlas Dashboard, go to the **Fundraising** tab, find the SAFE you’d like to void, click the three dots in its row, and select **Void**. The SAFE’s status will update to Voided. 1. The company signer and investor will receive an email from “Stripe Atlas via DocuSign” notifying them that the SAFE has been voided. 1. After voiding the SAFE, you can create a new one by clicking **Create SAFE** in your **Fundraising** tab. ### **How do I get the money from the investor?** You’ll need to arrange with your investor to transfer the funds. They’ll likely ask you for your bank details. Some Atlas partners support opening bank accounts before your EIN arrives. Go to the [Perks page in your Atlas Dashboard](https://dashboard.stripe.com/atlas/perks) and look for banking partners with the **Pre-EIN** label to get started. ### **Do I need a lawyer to fundraise with a SAFE using Atlas?** Atlas is designed to be used without help from a lawyer, but you can always consult one if you have additional questions. **Can I fundraise with Atlas if I didn’t incorporate my company using Atlas?** No. You can only use Atlas to fundraise if you incorporated using Atlas.