What are the basic similarities and differences between equity, convertible notes, SAFE, and KISS investments?

At a high level, an equity financing involves the issuance and sale of stock in a company to investors.

Non-equity financings are most typically done with convertible notes (e.g. using 500 Startups’s KISS documents or other documents) or with convertible securities (e.g. using Y Combinator’s SAFE documents). The intention of a non-equity financing is to later convert the securities / convert the investment into stock in conjunction with a priced equity round in the future.

Generally equity financings are more expensive, although the cost of an equity financing has come down over time. Convertible notes and convertible securities like SAFEs are much cheaper (if not free) to execute given the relatively simple/short nature of the documents involved in those.

Equity financings also usually take a longer time to negotiate and put together. Convertible notes and convertible securities like SAFEs are typically much faster to execute given the relatively simple/short nature of the documents involved in those. The number of terms negotiated in a convertible note or convertible security tend to be much less than in an equity financing.