<p class="PDq2pG_selectionAnchorContainer" data-start="1634" data-end="2285">A Simple Agreement for Future Equity typically includes several important terms that define how the investment converts into equity. These include the <strong data-start="1803" data-end="1820">valuation cap, which sets the maximum company valuation used for conversion; the <strong data-start="1888" data-end="1905">discount rate, allowing investors to purchase shares at a lower price than future investors; the <strong data-start="1989" data-end="2009">triggering event, such as a qualified financing round; and provisions for acquisitions or IPOs. Some SAFEs include both a valuation cap and a discount, while others use only one of these mechanisms. Understanding these terms is essential for both founders and investors before signing a SAFE.