A SAFE is basically a convertible note developed by YC[0] that is better for founders (at least mechanically) than most traditional convertible notes. As with other notes, the investor basically gives you money now in exchange for some equity at your next round TBD by a fixed formula.
As I noted elsewhere, the devil is in the details and the SAFE could be a good deal or an awful deal depending on the relationship between the SAFE's valuation cap (which is left blank and would be negotiated with each company) and the eventual pre-money valuation at the equity financing. I'd be surprised if SR is giving very high valuation caps.
