Article · 10 min read

Pre-money vs. Post-money SAFEs: The Dilution Math Founders Miss

Avisen Legal Free Intermediate

This is the side-by-side numbers piece: three investors each putting in $1M at a $10M cap end up owning exactly 30% of you under post-money SAFEs, but only about 25% under the old pre-money version because the SAFE holders share the dilution instead of you eating all of it. Seeing the same raise cost you 5 extra points depending purely on which version is on the paper is the fastest way to internalize why you read the header before you celebrate the cap.

  • Same raise, same cap: post-money costs you 30% while the old pre-money split the same dilution across SAFE holders and cost you around 25%
  • Under post-money, new SAFEs never dilute earlier SAFE investors, only you, which is why the version on the paper is not a detail
  • The cap alone tells you nothing until you convert it to the ownership percentage it implies at your expected raise size
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The question it answers

  1. Post-money SAFE or pre-money SAFE: which one am I actually signing and why does it matter?

Read with it

  1. The primary source for the SAFE itself, plus YC's plain-English primer explaining post-money mechanics. Use the official... Y Combinator Tool · templates + primer YC Safe Financing Documents (Official Post-Money SAFE) Y Combinator
  2. Written by an India-based cap table platform, so the modeling assumptions match how Indian founders actually raise. It walks a... EquityList Article · 12 min read Modeling Post-Money SAFEs in Your Cap Table: Tools and Mistakes to Avoid EquityList
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