A funding instrument that resolves
Future Redemption, with Quarterly Updates.
A SAFR™ is a claim that grows on a fixed schedule and settles in cash each quarter, or converts to equity, with verified numbers published on the same calendar every year. No maturity date to default against. No valuation to argue over. A cap, so it cannot run away from you.
If you are a founder
It is a mortgage you can pay off, not a claim that lingers on your cap table with no way to clear it.
If you are an investor
It is an early-stage claim with a believable path to getting paid back, and a quarterly look at how the company is doing.
What a SAFR is
You invest. In return you hold a claim on the company worth your money times a Multiple that rises on a published schedule, from 1.00 at the start to a hard cap of 2.50. The company settles that claim in cash at quarterly windows, as much as it declares it can afford, or you can convert into stock. That is the core of it.
The convertible note
Comes due on a date. If the company cannot pay or raise by then, everyone is in a default fight nobody wins.
Fails on timeThe SAFE
Solved that by deleting the date. But if the company never prices a round, the SAFE never converts and never resolves. It just sits there.
Never resolvesThe SAFR
Keeps the schedule but ties payment to what the company can verifiably afford each quarter. The claim is capped, and it always resolves.
Resolves on capacityIt replaces a deadline that can be missed with a budget set to what the company can afford, on a calendar everyone shares.
Why it exists
The SAFE was built for one world: high-velocity companies where a priced round was nearly certain and speed was the only constraint. Exported to everyone else, it became a trap.
Most companies that raise on a SAFE never reach a priced round or an exit, which are the only two events that make a SAFE convert. So most SAFEs become what the research calls zombie paper: held by people who will never get equity and can never get paid, with no maturity to force the question and no information rights to even see what happened. The instrument’s defining feature, that it never comes due, is exactly what strands the ordinary angel.
SAFR is for that large unpriced middle: companies that may never raise a Series A but can generate cash. Instead of a claim resolved by an event that may never come, it is resolved by the company’s own capacity, measured and published every quarter.
How the Multiple works
Your claim is your unreturned investment times the Multiple for the current month. The Multiple is a fixed curve. It starts at 1.00 (your money back), reaches 1.50 at month 36, 2.00 at month 60, and is capped at 2.50 from month 90 on.
The Multiple, by month since investment
- month 0
- 1.00×
- month 36
- 1.50×
- month 60
- 2.00×
- month 90+
- 2.50×
Your investment
$50,000
Months since you invested
60 months
The three things that can happen
Once you are past month 60 (or month 36, if the company opens the queue early), your claim can resolve three ways. You can join the redemption queue and be paid in cash from the company’s declared budget, pro rata with other holders. The company can buy you back at the schedule price, and if it does, you may choose to convert instead rather than take the cash. Or you can convert a slice each quarter into common stock at the published net-worth-per-share. Conversion is the option you hold for the two cases the schedule handles poorly: the company goes on to a big priced round, or it reaches the cap and you would rather own equity than keep waiting.
What it costs the company to wait
What the company will eventually owe keeps climbing toward the 2.5x cap. What changes over time is how quickly that cost is added, and that is what the figure below shows: the cost added each quarter, as an annual rate, for a position that stays outstanding. It is highest early, when the holder has no queue and no recourse, and it falls to zero once the Multiple is capped, at which point the company owes the full amount and it simply stops growing. The company decides quarter by quarter, so the cost is drawn as steps.
Cost added each quarter, as an annual rate, by month since investment
- Just after month 36
- ~18% / yr
- At month 60 (schedule eases)
- steps down
- At the cap (month 90+)
- 0% / yr
Months 36–60
Early, the schedule favors resolving
- The company can now report and buy back, and the climb is steepest here.
- The holder earns a steady return for the wait.
- Resolving early is genuinely cheaper than almost any other startup capital.
Months 60–90
In the middle, both sides have room
- The queue is open and the climb eases, so the company can defer when cash has better uses.
- The holder can redeem, keep waiting, or begin converting.
- Neither is forced; the schedule steps back and lets capacity and preference decide.
At the cap (month 90+)
At the cap, the holder chooses
- The Multiple stops growing, so waiting adds nothing further.
- The amount owed stands at the cap; it neither grows nor shrinks.
- A quiet nudge to pick a path: redeem through the queue, or convert to equity.
The life of a quarter
Every SAFR company runs on the same four fiscal quarter-ends, which turns reporting into a shared rhythm: the whole network publishes in the same weeks, like an earnings season for companies that never had one.
You elect
Holders lock in their moves for the quarter: redemption requests, conversion elections, and responses to any buyback notice.
The company updates
The Quarterly Update publishes: standardized net worth, expected capacity, the declared budget, and a single owners-and-leaders pay total. Computed from the data feed, not asserted.
It settles
Cash redemptions and buybacks pay, conversion shares issue. The update already fixed the budget and each holder’s share, so settlement just pays it out. Then the cycle begins again next quarter.
The numbers in the update are produced by one fixed formula applied to every company, so the market forms an expectation before the company says a word, and the company then meets it, misses it, or beats it. Over time that sequence becomes a quarter-by-quarter capacity history, the kind a SAFE never produces.
The two numbers that matter
The formulas behind a Quarterly Update live in the open Standard. To read one, you mainly need to know what two figures mean.
Ledger Base — the company’s standardized net worth
One fixed formula values what the company owns, the product development it has funded, and its revenue weighted by quality. It is never a negotiated valuation and never uses comparables, so it means the same thing across every company. It sets the conversion price and feeds the capacity figure.
Expected Capacity — what it could prudently pay this quarter
A quarter of free cash flow, after keeping a working-capital reserve. The company’s own declared budget can be more, less, or zero, but when it is less, it must say why. The figure below is the real worked example from the sample Quarterly Update.
Ledger Base composition and Expected Capacity (worked example)
- Tangible net assets
- $552,000
- Development asset
- $86,667
- Revenue value
- $627,500
- Ledger Base
- $1,266,167
- Expected capacity
- $45,000
- Declared budget
- $30,000
Reading it from your seat
If you are a founder
A forcing function you can live with
- 36 months to get your reporting in order, with free tools to do it.
- You control the levers: the declared budget each quarter, whether to buy back, whether to open the queue early.
- The data you share is aggregate. No individual pay, no customer names, no pipeline.
- Conversion lands in common, never preferred, so it never complicates your next round.
- The Form D is generated at closing, so the round is filed rather than left undone.
If you are an investor
A claim that resolves, and that you can watch
- Three real paths to resolution, not one event that may never happen.
- A quarterly, verified look at the company’s net worth and capacity.
- Conversion is your option for the upside cases; you are never forced into it.
- The downside is real: the claim is tied to net worth and, in failure, drops to your unreturned capital. This is risk capital.
If you hold a SAFE, note, or CISA
You can graduate onto these rails
- Your existing claim crosses into a SAFR at par, once the company has four clean quarters of capacity.
- A note or income share keeps its age on the schedule; a SAFE, which never priced time, starts fresh.
- Side letters fall away; everyone gets the same reporting. Any equity you held stays yours, untouched.
- The offer is made to every holder of your instrument on the same terms.
The questions everyone asks
For ventures on a trust or fund structure
A SAFR works for any company, organized as a corporation or otherwise. When conversion happens inside an entity that is not a stock corporation, you receive the equivalent ownership units, carrying the same economic rights, with governance set by that entity’s organizing documents.
That last point is deliberate. In some structures, economic ownership and governance are held separately: operators keep both, while passive holders hold the economics and the entity’s documents set how governance is delegated. If you convert into such a structure, your economic claim is the same as common, and your conversion materials will state plainly how governance works there. The instrument stays the same for everyone; the structure you convert into is disclosed up front.
Safe was the start. Redemption is the point.
This guide explains an open canonical instrument and is provided without warranty and without legal advice. It is a plain-language companion to the SAFR canonical form (v0.06) and the SAFR Reporting Standard (major version 0); where this guide and those documents differ, those documents control. The instrument and Standard are free to use under their open license, and the SAFR™ name is reserved for the unmodified canonical terms maintained on a conforming data feed. Consult your own counsel before issuing or accepting any instrument.