Web3 project founders need to identify crypto fundraising as their most critical initial step for project or token launch. Web3 project launches heavily depend on crypto fundraising as one essential starting point. Wrong funding approaches result in potential legal complications and create confusion among participants while causing delays in your project's development path. During the first quarter of 2025 venture capital injected $4.8 billion into crypto sector investment which represented the highest amount since Q3 2022.

The SAFE and SAFT instruments serve as two major fundraising instruments available to project ventures. Early-stage projects utilize these two instruments yet function according to separate mechanisms which support different project purposes.

This article will provide an explanation of both SAFE and SAFT agreement and their operational mechanics while offering guidance to founders on selecting appropriate crypto fundraising instruments.

Understanding the Basics

What is Crypto Fundraising?

Crypto fundraising is the procedure of obtaining financial support to develop blockchain or Web3 projects. The fundraising process includes the sale of project tokens and rights to future token distributions and equity offers. Traditional fundraising methods differ from crypto fundraising because it uses tokenized instruments to represent the decentralized nature of projects.

What is SAFE?

SAFE stands for Simple Agreement for Future Equity. Through this legal agreement, investors can invest in projects today and obtain both equity and tokens at a later time. SAFE was created by Y Combinator to establish an easier way for early-stage fundraising while postponing immediate valuation definition.

What is SAFT?

SAFT stands for Simple Agreement for Future Tokens. SAFT is a financing arrangement which allows participants to receive tokens during specific timeframes often after the network or product is launched. This fundraising contract suits token-based projects and functions especially during pre-sales together with private token rounds.

Who Can Participate in a SAFT or SAFE?

SAFE and SAFT represent separate methods for private fundraising services. Both SAFTs and SAFEs serve as exclusive private funding instruments that were designed to exclude retail customers. SAFT is mainly for institutional or accredited investors and is used during token-based private rounds. And then SAFE funding occurs during early phases of fundraising while providing future tokens or equity to participants yet remains restricted to private rounds. For public token sales, teams should consider Token Purchase Agreements or regulated IDO platforms designed for retail participation.

Key Differences Between SAFE and SAFT

Early-stage crypto fundraising relies on both SAFE and SAFT instruments yet they function differently to achieve separate targets.

Equity vs Token-Based Fundraising

SAFE compels investors to receive equity in the future or alternatively benefits from future tokens. A token has not been released yet so this option becomes pertinent. On the other hand, SAFT is specifically for a token-based project fundraising. Through this arrangement investors secure a legal right which enables them to obtain network tokens after the project activation.

Legal and Regulatory Considerations

SAFE is known nearly as a traditional investment instrument which steers clear of complex legal problems associated with tokens at the project's early phase. The legal nature of SAFT actively involves tokens which results in different security treatments by regulatory authorities throughout various jurisdictions. To establish compliance status SAFTs require additional official legal reviews.

Timing and Conversion Conditions

The conversion process for SAFE agreements takes place after specific future events like new fundraising rounds or token launches. The conversion process for these instruments exists within free parameters regarding time and method of use. SAFTs are more direct. The delivery of tokens specific to SAFT agreements needs predefined launch conditions for project completion.

Key Characteristics of SAFE and SAFT

SAFE – Simple Agreement for Future Equity

• What investors get
  Investors receive future equity or tokens. They don’t get anything immediately, but their investment converts later during a fundraising event or token launch.

• Used when
  The startup is early-stage and not ready to issue tokens. SAFE is common when the team is still building, and the business model is not fully tokenized.

• Cost and complexity
  SAFE is simple and low-cost. It avoids legal complexity at the start and helps founders raise funds quickly.

• Risk to investors
  High risk. If the startup fails before reaching a trigger event, investors may end up with nothing — no equity and no tokens.

• Flexibility
  The terms are flexible and negotiable. This makes it easier for founders to structure deals with different investors.

• Vesting and liquidity
  SAFE agreements don’t offer immediate liquidity. Equity or tokens are delivered later, often with vesting schedules depending on the event.

SAFT – Simple Agreement for Future Tokens

• What investors get
  Investors receive tokens in the future. These are not equity shares. The agreement is tied to a planned token generation event.

• Used when
  The startup plans to issue tokens and has a clear product or network roadmap. SAFT is popular for token-first projects.

• Cost and complexity
  SAFT is more complex and usually needs legal review. It’s designed to meet regulatory requirements in jurisdictions where token sales are treated as securities.

• Risk to investors
  Still high. If the network never launches or fails, investors may not receive any tokens.

• Flexibility
  SAFT agreements tend to follow standard legal templates. Terms like crypto vesting and token distribution are harder to change once signed.

• Vesting and liquidity
  Tokens are delivered after the TGE, often with a vesting period and cliff to reduce immediate sell-offs.

Pros and Cons of SAFE and SAFT

The safety benefits and disadvantages of SAFE and SAFT function as distinctive elements between these two tools. The selection of SAFE or SAFT as a token agreement depends on the project development level and existing plans and legal guidelines. These two contracts differ in terms as illustrated below in a compact overview.

Choosing the Right Instrument for Your Web3 Project

The selection between SAFE and SAFT depends on project development requirements during specific stages before token release. The appropriate choice depends on where the project stands along with plans to introduce its token.

Projects which have not completed their building or are unavailable to issue tokens commonly initiate their fundraising with SAFE documents. Neither must token specifics nor project flexibility need to be decided beforehand when using SAFE for fundraising purposes. A SAFE is advantageous at the starting point of development since the tokenomics structure remains unestablished.

SAFT fits best situations where developers already work on their token development alongside verified launch plans. A project that requires funding for a token release can use it most effectively if the team can manage to finish the token development goals.

Here are a few guiding questions to help make the choice:

• Is the token model fully defined and legally reviewed?

• Is there a clear timeline for launch or token generation?

• Do investors expect equity, tokens, or both?

• Does the project need flexibility in delivery or legal structure?

Founders should align their choice with their roadmap, investor expectations, and regulatory position. In some cases, legal advisors may even recommend using both instruments at different stages.

Plan Your Crypto Fundraising the Right Way

Selecting between SAFE and SAFT requires more than legal considerations since it directly influences how investors perceive your project and your capacity to establish trust at the initial stage. Your project receives multiple perspectives from investors and trust foundations are established as soon as they begin their relationship with you through their choice.

At TokenMinds, we help Web3 founders build smart fundraising strategies. Whether you're raising equity or planning token sales, our experts can guide you through tokenomics, legal setup, and investor readiness.

Looking to raise funds with confidence?
Let’s build your crypto fundraising strategy together and schedule a consultation with us now.