SAFE Note Calculator.

A SAFE (Simple Agreement for Future Equity) is a financing instrument created by Y Combinator in 2013 that lets startups raise capital without setting a valuation. The investor wires money now and receives shares later, at the next priced equity round, at terms set by the valuation cap, discount rate, or both. A SAFE is not debt: there is no interest, no maturity date, and no repayment obligation. It converts to equity at a future financing or terminates on dissolution or change of control.

The original 2013 SAFE was pre-money: the valuation cap was applied to the pre-financing share count, so when multiple SAFEs stacked, the dilution arithmetic became confusing and surprising to founders. In 2018 Y Combinator switched to the post-money SAFE, where the cap is applied to the post-SAFE share count. The post-money cap gives the SAFE investor a fixed, predictable ownership percentage of the company at conversion, regardless of how many other SAFEs are later signed. Today the vast majority of US startup SAFEs are post-money. This calculator supports both modes side by side.

The valuation cap is the maximum company valuation at which the SAFE converts. If the priced round happens at a valuation below the cap, the SAFE investor converts at the priced-round price (with discount applied). If the round happens above the cap, the SAFE investor gets a better deal: their conversion price equals the cap divided by the fully-diluted share count (post-money) or pre-financing share count (pre-money). A lower cap is more investor-friendly. Caps typically range from $2M for very early pre-product rounds to $25M+ for post-revenue YC companies.

The discount rate gives the SAFE investor a percentage off the next round price. A 20% discount means the SAFE converts at 80% of the priced-round price per share. Discounts typically range from 10% to 30%, with 20% the most common. If the SAFE has both a cap and a discount, the conversion price is whichever is more favorable to the investor (i.e. the lower of the two prices). Discount-only SAFEs (no cap) exist but are rare because they offer no protection against a runaway valuation.

Two prices are computed and the lower one wins. Cap price = valuation cap divided by fully-diluted share count at conversion (post-money mode includes option pool and other converting SAFEs; pre-money mode counts only pre-financing shares). Discount price = next round price per share times (1 minus discount rate as a decimal). Conversion price = min(cap price, discount price). The SAFE then converts at: shares issued = SAFE amount divided by conversion price. The lower price means more shares for the investor, which is why the formula always picks the more investor-friendly side.

MFN stands for "Most Favored Nation". If a SAFE has the MFN clause enabled and the company later issues another SAFE with better terms (lower cap, higher discount, or both), the MFN holder can elect to amend their SAFE to match those better terms. The MFN clause protects early investors from being undercut by later, savvier investors. In this calculator, toggling MFN on a SAFE automatically applies the lowest cap and highest discount seen across the full SAFE stack, modelling the post-amendment state.

A SAFE only converts on three triggers: a qualifying equity financing (i.e. the priced round), a liquidity event (acquisition or IPO), or a dissolution event. If none of these happen, the SAFE simply sits on the cap table indefinitely. There is no maturity date and no obligation to repay. If the company dies, the SAFE holder is treated like a preferred shareholder with a liquidation preference equal to the purchase amount, but in practice most SAFEs return zero in a shutdown. This is the biggest difference from a convertible note: a SAFE has no maturity, no interest, and no debt-like protections.

Each SAFE is converted independently using its own cap and discount, then all the resulting share counts are added to the cap table at the priced round. The order they were signed does not change the math, but with pre-money SAFEs, stacking causes nonlinear dilution because each SAFE's cap divides the same pre-financing share base. Post-money SAFEs are linear: each SAFE's post-money cap gives a fixed ownership target, so total founder dilution is the sum of the targets. This calculator computes the full stack live, up to 8 SAFEs.

A convertible note is debt: it accrues interest (typically 4 to 8 percent), has a maturity date (often 18 to 24 months), and if the company has not raised by maturity the noteholders can technically demand repayment or convert under fixed terms. A SAFE has none of these: no interest, no maturity, no debt. Both convert to equity at the next priced round using cap and/or discount math. SAFEs are simpler, faster to sign, and dominant in US early-stage today; convertible notes remain common outside the US and in cases where investors want the protection of debt-like terms.

When the SAFE converts, the SAFE investor receives newly-issued shares. Those shares come out of the company's ownership, meaning every existing shareholder (founders, employees, prior investors) sees their ownership percentage drop proportionally. With post-money SAFEs, founder dilution at conversion equals the sum of the SAFE's post-money ownership percentages. A $1M SAFE on a $10M post-money cap dilutes founders by exactly 10% at conversion (before the priced round and option pool top-up are layered on top).

New priced-round investors typically require the option pool be expanded to a target percentage (often 10 to 15 percent post-money) as a condition of investment, and they require this top-up to come out of the pre-money cap table, meaning existing shareholders and SAFE holders absorb the dilution before the new investor's shares get issued. This is called the option pool shuffle, and it can shave 2 to 5 additional percentage points off founder ownership beyond what the SAFE math alone suggests. This calculator solves the option pool top-up iteratively because it interacts with SAFE conversion.

Yes, and many do. Common side-letter additions include pro-rata rights (the SAFE investor can invest additional capital at the priced round to maintain ownership), information rights, board observer seats, and most-favored-nation language broader than the standard YC MFN. Side letters do not appear on the SAFE form itself but are binding parallel agreements. None of these change the conversion math directly, but pro-rata rights especially can shape how the post-priced cap table looks because the SAFE investor takes more of the priced round than a naive simulation would assume.

SAFEs are right for very early, fast, small rounds: under roughly $1.5M total, with no lead, signing investor-by-investor. They avoid the cost (typically $30K to $80K in legal fees) and time (4 to 8 weeks) of a full priced round. Once you are raising $2M+, have a lead investor, or want to set a clean valuation, a priced round (Series Seed or Series A) is usually better. The downside of stacking too many SAFEs is that founders can lose track of total dilution: a dozen $50K SAFEs at $5M caps will dilute more than founders expect when they all convert at once.

Pragmatically, the most-common red flag is when total SAFE conversion dilution exceeds 25 to 30 percent before any priced money has gone in. By that point the priced-round lead will look at the cap table, do the post-conversion math, and either push founders to renegotiate the SAFEs (rarely possible) or demand a lower pre-money to compensate for the existing dilution stack. Eight SAFEs is the practical upper limit before the cap table gets messy. Use this calculator to stress-test the stack before signing the next one.

SAFEs are neither classic debt nor classic equity until they convert. They are best described as a "promise of future equity". Accounting treatment varies by jurisdiction: under US GAAP many SAFEs are classified as equity from issuance because they have no maturity and no interest, but some get classified as liabilities depending on the terms. For tax and cap-table purposes, most YC-style SAFEs are treated as equity (or "equity-like") and do not appear in the debt section of a balance sheet. They do, however, fully count for dilution modelling, which is what this tool calculates.

An uncapped SAFE has no valuation cap, only a discount (typically 20%). The investor gets a 20% discount off the next round price, no matter how high. Uncapped SAFEs are extremely founder-friendly because they put no ceiling on company valuation and they convert at whatever the priced round dictates. They are also rare: most investors will not sign an uncapped SAFE unless they have very high conviction or are personal angels who do not run the math. They appear most often in friends-and-family rounds and very-early founder-to-founder bridging.

The standard YC post-money SAFE form does not include automatic pro-rata rights. To get them, the SAFE investor signs a separate "pro-rata side letter" alongside the SAFE, which grants the right to invest additional capital at the next priced round to maintain a proportional ownership percentage. This calculator does not model pro-rata participation directly because it is investor-elective, but you can simulate it manually by adding the pro-rata amount to the New Investment input under the priced round once you know which SAFE holders will participate.

Because the option pool top-up is a pre-money event: it expands the share count before the priced round prices, which means founders absorb the dilution and the new investor does not. Going from a 10% post-money pool to a 15% post-money pool can take 4 to 5 percentage points off founder ownership while leaving the new investor's percentage unchanged. This is exactly why founders should negotiate the option pool target hard. The shuffle is also why some founders prefer to top up the pool post-financing or shift more responsibility to the new investor: there are legitimate negotiation moves to reduce its bite.