SAFEs (Simple Agreements for Future Equity) are the standard early-stage instrument: investors give you cash, you give them the right to convert into shares when you raise a priced round. The math at conversion is where founders get burned. Octelligence does it for you, but the inputs need to be right.
Before you start
You need three things ready:
- All outstanding SAFEs entered with their cap, discount, and MFN terms (Octelligence prompts you on each)
- The priced round's terms: price per share, post-money valuation, target raise
- The new preferred share class set up (see Set up share classes)
Available on Growth and above. SAFE tracking with cap, discount, and MFN, plus priced-round batch conversion, is included in Growth ($69/mo) and Scale tiers. Starter tracks up to 3 SAFEs without conversion math.
SAFE terms refresher
Three terms control how a SAFE converts:
- Valuation cap: the maximum company valuation used to calculate the SAFE holder's price. If the priced round happens at a higher valuation, the SAFE holder converts at the cap (a better price for them).
- Discount: the percentage discount the SAFE holder gets off the priced-round price. Typically 10–25%. The holder takes whichever produces a better price — discount or cap.
- MFN (Most Favored Nation): if you later issue a SAFE on better terms, this SAFE holder gets to elect those terms. Triggered at conversion.
Some SAFEs have only a cap, some only a discount, some both, some MFN-only. Octelligence handles all four configurations per SAFE.
Step-by-step
Confirm all SAFEs are recorded
Go to Cap Table › SAFE Notes. Every outstanding SAFE should be listed with:
- Investor name and signed instrument
- Principal amount (cash invested)
- Issuance date
- Cap (if applicable), discount (if applicable), MFN (yes/no)
If anything is missing, add it before proceeding. Conversion math depends on accurate inputs.
Set up the priced round's preferred class
Go to Cap Table › Share Classes and add the new preferred class (e.g., "Series Seed Preferred" or "Series A Preferred"). You'll need the negotiated price per share from your term sheet. See Set up share classes for the full configuration.
Start the priced round
Go to Cap Table › Financings and click New financing round. Fill in:
- Round name (e.g., "Series Seed", "Series A")
- Round date (closing date)
- Price per share (from term sheet)
- Pre-money valuation
- Target raise (new investor dollars)
- Whether the option pool expansion is pre-money or post-money
- The preferred share class created in step 2
Review the SAFE conversion preview
Before you commit, Octelligence shows you the conversion preview for every outstanding SAFE:
- Conversion price per share (lower of cap-implied price, discount price, and any MFN-elected terms)
- Number of preferred shares the SAFE holder receives
- Effective ownership percentage post-conversion
- Total dilution to existing common holders
This is the moment to catch errors. If a SAFE holder is showing the wrong conversion price, the input data is wrong — go back and check the cap, discount, and MFN on that SAFE. Cap Table Basics for Founders explains what the math should look like if you want to sanity-check by hand.
Run the batch conversion
When the preview matches what your counsel expects, click Convert all SAFEs & close round. In one transaction:
- Every outstanding SAFE converts to preferred shares at its calculated price
- New preferred share certificates are issued (QR-verified, public verification pages)
- The new investor block is recorded
- The option pool expansion is added (if specified)
- The cap table updates to reflect the post-round structure
- A round closing event is added to your corporate records timeline
Generate the post-round cap table for closing
Go to Cap Table › Snapshots and create a snapshot dated the closing date. Counsel will want this for the closing binder. You can export as PDF, CSV, or share via a public link with access audit.
A worked example
To make the math concrete:
- You raised $500K on a single SAFE with a $5M post-money cap, no discount, no MFN.
- Your priced round is happening at a $10M pre-money valuation, $1.00 per share.
Without the cap, the SAFE holder would convert at $1.00 per share = 500,000 shares.
With the $5M post-money cap: the cap implies the SAFE holder's effective price was based on a $5M valuation, not $10M. So they get 2x the shares: 1,000,000 shares.
Octelligence calculates this automatically. You don't have to.
Scenarios: model before you commit
On Growth and above, you can run scenarios that don't touch the actual cap table:
- A vs B comparison: two term sheets at different valuations side by side
- Option pool sizing: impact of a 10% vs 15% post-money pool on founder dilution
- Multi-round chains: Series Seed → Series A → Series B with assumptions
Use scenarios before signing a term sheet. The math is reversible until you commit the round.
Common gotchas
Pre-money vs. post-money cap. Most modern SAFEs use post-money caps (Y Combinator's standard since 2018). Older SAFEs may be pre-money. The conversion math is different. Octelligence asks per SAFE; make sure you select the right type.
Stacked SAFEs with different caps. If you raised on multiple SAFEs at different caps and one discount, the conversion order matters. Octelligence handles the standard "convert all at once, each at its own best price" approach. If your counsel has a different methodology, document it.
MFN elections. If a SAFE holder has MFN and you've since issued a SAFE on better terms, the holder may elect those terms at conversion. Octelligence prompts you to confirm any MFN elections before running the batch conversion.
The pool shuffle. Investors typically negotiate the option pool top-up as pre-money — meaning existing holders (founders) take the dilution, not the new investors. Octelligence shows the impact both ways so you can negotiate from informed numbers.
What lives where after conversion
Once the batch conversion runs, your cap table has:
- Common shares: founders, employees from exercised options, and anyone else who held common pre-round
- Series Preferred: the new investor block + the converted SAFE shares
- Option pool: ungranted plus granted-but-unvested, as expanded by the round
Every converted SAFE keeps a permanent record: the original instrument, the conversion math, the resulting share issuance, and the new certificate. Diligence-ready.