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    Funding Stages & Instruments
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    Global · Global

    Pre-Money SAFE

    Also called: Pre-money Simple Agreement for Future Equity

    TL;DR

    The original (2013) SAFE variant where the valuation cap was computed on a pre-money basis, sharing dilution across SAFE holders.

    In a pre-money SAFE, the cap refers to the company's pre-money valuation. When multiple pre-money SAFEs convert at the same priced round, they collectively dilute the founders, but they also dilute each other, which means an early SAFE holder's final ownership percentage shrinks as more SAFEs are added.

    The pre-money SAFE was retired in 2018 in favor of the post-money SAFE, but a meaningful number of legacy SAFEs are still on cap tables and need to be modeled correctly.

    Formula

    Pre-Money SAFE Ownership % ≈ SAFE Investment ÷ (Cap + Sum of Other Pre-Money SAFEs)
    • SAFE Investment , Dollars invested via the pre-money SAFE
    • Cap , Pre-money valuation cap
    • Other Pre-Money SAFEs , All other pre-money SAFEs that convert at the same priced round (each dilutes the others)

    Unlike post-money SAFEs, pre-money SAFEs dilute each other, stack 4 pre-money SAFEs and you can give up materially more than expected.

    Worked example

    $1M pre-money SAFE at $10M cap. If three other $1M pre-money SAFEs convert at the same time, the cap effectively expands and each SAFE holder ends up with ~8.3% (not 10%), a common founder surprise.

    Common pitfalls

    • Modeling pre-money SAFEs as if they were post-money.
    • Issuing new pre-money SAFEs in 2024+ when the post-money form is standard.
    • Forgetting that pre-money SAFE ownership shrinks as more SAFEs stack.

    When this shows up in a pitch deck

    Rarely surfaces in deck content; matters for cap-table modeling and investor diligence.

    Related terms

    Pitch deck pillar pages

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