SAFE (post-money)
Simple Agreement for Future Equity. The Y Combinator post-money form, in standard use since 2018.
| Introduced | Y Combinator, 2013 (pre-money) and 2018 (post-money) |
|---|---|
| Standard variants | Cap only, discount only, cap and discount, MFN (most favoured nation) |
| Used in | US, Canada, UK and broadly across early-stage private markets globally |
Why post-money replaced pre-money
The original 2013 SAFE was a pre-money instrument. The investor agreed to convert at the next priced round at a defined valuation cap or discount, but the percentage of the company they would ultimately own depended on how many additional SAFEs the corporation issued before the priced round. Stacking SAFEs diluted earlier SAFE holders alongside the founders, and modeling the eventual ownership was difficult.
The 2018 post-money SAFE solved the modeling problem by fixing the investor's ownership as a percentage of the post-money cap. When additional SAFEs are issued later, they dilute the founders rather than the earlier SAFE holders. The trade-off is that founders give up more ownership than they often realize until they see the conversion math at the priced round.
How conversion works
At the next priced equity round, each post-money SAFE converts into shares of the same series being issued in the priced round. The number of shares is calculated by reference to the lower of:
- The valuation cap. If the priced round occurs at a valuation higher than the cap, the SAFE investor converts as if the round had occurred at the cap. They receive more shares per dollar invested than the new priced-round investors.
- The discount rate. If the priced round occurs at or below the cap, the SAFE investor receives a discount (commonly 10–25%) off the priced-round price per share.
Many SAFEs include both a cap and a discount; the investor receives whichever is more favourable.
The four standard variants
Y Combinator publishes four post-money SAFE templates, distinguished by what economic protection the investor receives:
- Cap only. Valuation cap, no discount. The simplest form.
- Discount only. Discount on the priced-round price, no cap.
- Cap and discount. Both, with the investor receiving the more favourable conversion. The most common form for priced funds.
- MFN. Most favoured nation. The SAFE has no cap or discount, but if the corporation issues a later SAFE on more favourable terms, this SAFE is amended to match.
What founders should track
Each post-money SAFE on the cap table needs:
- Principal amount and date of investment
- Valuation cap and discount rate (if any)
- Pro-rata rights, if granted (most YC SAFEs include them only as a separate side letter)
- The investor's locked-in fully diluted percentage at the moment of investment, calculated from the corporation's post-money cap including the SAFE itself
When the priced round arrives, all outstanding SAFEs convert simultaneously, typically before the new money. The math compounds quickly when several SAFEs are outstanding with different caps and discounts, which is why batch SAFE conversion is one of the operations most likely to introduce errors in a hand-maintained cap table.
Octelligence treats SAFEs as first-class objects on the cap table: cap, discount, MFN, and pro-rata rights are tracked alongside each instrument. At the next priced round, batch conversion runs the conversion math for every outstanding SAFE in a single operation. Available on Growth and Scale plans.
See Cap Tables & FinancingSAFEs and convertible notes as first-class instruments, batch priced-round conversion, and A vs. B scenario modeling.