Post-money SAFE conversion calculator.
A post-money SAFE converts at whichever gives the holder the bigger stake: the SAFE amount divided by the post-money cap, or the amount divided by the discounted round pre-money. A $500,000 SAFE with an $8 million cap and 20% discount, converting at a $15 million pre-money, takes 6.25% before the new money and about 4.93% after a $4 million round.
SAFE stake after the round
4.9%
- Stake at the cap
- 6.3%
- Stake at the discount
- 4.2%
- Valuation the SAFE converts at
- $8,000,000
- SAFE stake before new money
- 6.3%
Indicative result from the numbers you enter. Not financial, tax or legal advice.
How it is calculated.
- Stake at the cap = SAFE amount / post-money cap.
- Stake at the discount = SAFE amount / (round pre-money x (1 - discount)).
- The SAFE takes the larger of the two; the valuation it converts at is the lower of the cap and the discounted pre-money.
- Stake after the round = stake before x pre-money / (pre-money + new money), because the new investors dilute everyone in the pre-money, SAFE holders included.
Worked example.
$500K SAFE, $8M cap, 20% discount
| Step | Working |
|---|---|
| Stake at the cap | $500,000 / $8,000,000 = 6.25% |
| Stake at the discount | $500,000 / ($15,000,000 x 0.8) = $500,000 / $12,000,000 = 4.17% |
| Converts at | The cap, $8,000,000, because 6.25% is larger |
| Stake after the round | 6.25% x 15 / (15 + 4) = 4.93% |
Post-money versus pre-money SAFEs.
Y Combinator moved its standard SAFE to a post-money cap in 2018, and it is now the most common form in US early rounds. The cap fixes the holder’s percentage of the company as it stands right before the priced round, after all SAFEs convert. That makes the holder’s stake easy to read and puts the dilution from each new SAFE on the founders.
Older pre-money SAFEs measured the cap before the SAFEs themselves, so stacking several of them diluted earlier SAFE holders as well. If your documents are older, check which form you signed.
Caps and discounts in practice.
A 20% discount is the figure most often seen when a discount is included at all, and many SAFEs carry a cap only. The discount wins only when the priced round comes in close to or below the cap; in a round priced well above the cap, as in the example, the cap decides.
Add up every SAFE.
Each post-money SAFE takes its own percentage, and the stakes add up. Three SAFEs of 6%, 5% and 4% together take 15% before the priced round, all from the founders and option holders. Keep a running total in the cap table as you sign each one.
Common mistakes.
- Treating the post-money cap as if it were a pre-money valuation.
- Signing SAFEs one at a time without adding up the total stake they will take.
- Forgetting that SAFE holders are diluted by the priced round investors, not by later SAFEs.
- Ignoring a pro rata side letter that lets the holder buy more in the priced round.