What makes everyone so sure SAFE rounds are founder-friendly?

SAFEs, simple agreements for future equity, have long been touted as a founder-friendly structure for signing venture deals. But is it really fair to call them that?

TechCrunch+ recently surveyed a handful of VCs and founders about how they’re feeling about SAFE rounds in this tougher fundraising market, especially now that power has largely shifted back to investors. We found that while both groups championed the deal structure at the earliest stages and for capital raises in between formal rounds, founders seemed less enthused about SAFEs overall.

Isn’t it a bit odd to be hesitant about something that is supposedly good for you?

The SAFE structure can definitely be beneficial to founders. A SAFE with no valuation cap allows founders to have significantly more control over price, it’s quicker to close if you need cash fast, and, hey, it costs less in legal fees.

But there are a few things about this deal structure that give me pause. Is a model that is faster and comes with less legal oversight really better for founders who may be taking on money for the first or second time, compared to a VC who looks at deals all day? Indeed, there are several drawbacks to SAFE rounds that can bite founders down the line.