Post-Money SAFE
Category: Funding Stages & Instruments · Level: Mid · Also called: Post-money Simple Agreement for Future Equity
TL;DR
The 2018 YC SAFE variant where the valuation cap is computed on a post-money basis, making the investor's ownership share predictable.
In a post-money SAFE, the cap reflects the company's valuation after the SAFE money is included. This means the SAFE holder's percentage at conversion is locked in regardless of how many other SAFEs convert at the same time — eliminating the 'SAFE dilution surprise' that plagued pre-money SAFEs.
The trade-off is that founders get diluted slightly more because there's no implicit dilution sharing among SAFE holders. Post-money SAFE math is more transparent but typically more dilutive than the equivalent pre-money structure.
Formula
SAFE Ownership % = SAFE Investment ÷ min(Cap, Round Pre-Money) (post-money basis)
- SAFE Investment — Dollars invested via the SAFE
- Cap — Post-money valuation cap on the SAFE
- Round Pre-Money — Pre-money valuation of the next priced round
Post-money SAFE ownership is locked at conversion; subsequent priced-round dilution affects all common holders, not the SAFE holder's locked %.
Worked example
$2M post-money SAFE with $20M cap. If next round prices at $30M pre-money, SAFE converts at $20M cap → $2M / $20M = 10.0% post-SAFE-conversion ownership, locked regardless of round size.
Common pitfalls
- Stacking many post-money SAFEs without modeling cumulative dilution.
- Failing to update the option pool plan for post-conversion math.
- Confusing post-money cap with the next round's post-money valuation.
When this shows up in a pitch deck
Cap-table modeling rather than deck copy; mentioned only when deal terms are unusual.
Related terms
- SAFE — Y Combinator's Simple Agreement for Future Equity — a contract that gives an investor the right to equity in a future priced round, with no debt or interest.
- Pre-Money SAFE — The original (2013) SAFE variant where the valuation cap was computed on a pre-money basis, sharing dilution across SAFE holders.
- Valuation Cap — The maximum company valuation at which a SAFE or convertible note will convert into equity, protecting early investors from dilution at high prices.
- Dilution — The reduction in an existing shareholder's ownership percentage caused by issuing new shares in a financing or an option grant.
- Post-Money Valuation — The company's value immediately after a new investment closes, equal to pre-money valuation plus the new investment amount.
Use this in your next pitch deck
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