As a form of convertible debt, SAFE notes do qualify for Section 1202 QSBS, but only at (i) the date, the note is converted, and (ii) the original investment in the SAFE note. QSBS must be held for five years and that timeline does not start until the SAFE note is converted from a debt vehicle to equity on the cap table. Due to SAFE notes converting at either (a) a discount or (b) a cap it is definitely a stretch to say that section 1202 covers the value of the investment after the conversion. Generally, when SAFE notes are converted they will immediately have an unrealized gain due to the discount or “cap”, which is a valuation below the current priced round. The built-in gain on conversion is not included as QSBS. QSBS only covers the original investment in terms of dollars.