Its a Simple Agreement to Future Equity. It's a fundraising instrument where the investor agrees to give the company money in exchange for some amount of equity to be decided at a future date. It's designed to make it easier for founders to get capital at the early stages without having to negotiate valuation.

This video "Understanding SAFEs and Priced Equity Rounds" from YC is a great resource: https://www.ycombinator.com/library/6m-understanding-safes-a...

Basically a contract that the investor will give you money now and be given equity in the next financing round in the future.

S.A.F.E = Simple agreement for future equity

It's like a "preorder for investors"

The best thing to do is to actually read SAFE templates, they are self-explanatory. Pretty much now these are standard instruments for early-stage investing for everyone, not only YC, so investor or founder you’ll see them a lot.

https://www.ycombinator.com/documents/

Prior to the SAFE, a lot of startups raised using convertible debt, which had a bunch of strings attached (convertible notes typically have an interest rate, a cap, and a discount). SAFE was an attempt to make this simpler and more founder friendly.

It’s a home-cooking (but I think accurate and clear) description: https://www.ycombinator.com/documents/