SAFE / ASA note shariah compliance

Assalamu alaykum,

I have a question about the permissibility of a SAFE Note / ASA.

I see that IFG.VC invested in a startup (Opvia) via a SAFE Note –
“We are investing via a SAFE note which will be converted to equity at Opvia’s next
round. This is the USA’s version of the ASA that we have invested through multiple
times. It is fully sharia-compliant as the shares convert to equity once the round is

However, i’m a bit confused as to what it means for shares to convert to equity; is there some component of preferred shares in this model?

As we know, preferred shares are impermissible [1], so I’m curious how the investment is structured in a shariah-compliant way.

Jzk khayrun


salaam, following up on this @Mufti_Faraz_Adam @Mufti_Billal, jzk

asalamu alaykum

would someone be able to answer @Mufti_Faraz_Adam @Mufti_Billal

i hope the q makes sense.