What Are the Key Differences between a SAFT and a Traditional Convertible Note?

Both a SAFT and a traditional convertible note are instruments used for early-stage fundraising that convert into an asset later. A traditional convertible note converts into equity (shares) in the company, whereas a SAFT converts into tokens on a future network.

The primary legal difference is the intended final asset: equity is clearly a security, while the SAFT aims for the final token to be classified as a non-security utility asset. A convertible note's value is tied to the company's valuation; a SAFT's value is tied to the network's eventual token price.