Fundraising & Investors

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

A starting point

YC's post-money SAFE (the standard since 2018) locks the investor's ownership percentage the moment they sign, which means every new SAFE you add dilutes you the founder, not them. That's cleaner for investors and more expensive for you than the old pre-money SAFE, so read which version is on the paper before you celebrate the cap. The number that matters is not the cap alone, it's the ownership percentage that cap implies at your expected raise.

Go deeper

Hand-picked from around the web, each with a note on why it earns your time.

3 resources 3 link-checked Read Use

Read

📄 Article
✓ Link checked India Free Intermediate

Why we picked it Written by an India-based cap table platform, so the modeling assumptions match how Indian founders actually raise. It walks a concrete stack (a $250K SAFE at $5M cap = 5%, then a $500K SAFE at the same cap = 10%) to show you giving away 15% before Series A even opens, then models the Series A on top so you see founder equity drop from 85% to roughly 64%. This is the ownership-percentage-that-the-cap-implies math the answer is pointing at, done for you.

Modeling Post-Money SAFEs in Your Cap Table: Tools and Mistakes to Avoid

From EquityList by EquityList 12 min read

  • Post-money SAFEs concentrate all dilution on founders and existing shareholders, unlike pre-money SAFEs where SAFE holders share the hit
  • Stacking SAFEs without modeling the cumulative percentage is the classic mistake: 5% plus 10% is 15% gone before your priced round
  • SAFEs also move your 409A valuation and employee option pool, so the cost is bigger than the cap number alone suggests
Open equitylist.co →
📄 Article
✓ Link checked Free Intermediate

Why we picked it 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.

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

From Avisen Legal by Avisen Legal 10 min read

  • 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
Open avisenlegal.com →

Use

🛠️ Tool
✓ Link checked Free Intermediate

Why we picked it The primary source for the SAFE itself, plus YC's plain-English primer explaining post-money mechanics. Use the official document, not a random copy, and read the primer before you sign.

YC Safe Financing Documents (Official Post-Money SAFE)

From Y Combinator by Y Combinator templates + primer

  • Post-money SAFE lets you calculate investor ownership precisely and immediately
  • Five standard variants (cap, discount, MFN, etc.) plus an optional pro-rata side letter
  • It's a starting point usable in most situations without modification
Open ycombinator.com →

People also ask

What is a SAFE and how does it actually work? A SAFE (Simple Agreement for Future Equity) lets an investor give you money now in exchange for equity later, when you raise a priced round, withou... Beginner 3 resources → What's the difference between a valuation cap and a discount on a SAFE? A cap sets the maximum valuation at which your SAFE converts, protecting the investor's upside if you raise your next round at a high price; a disc... Intermediate 3 resources → How is my startup's valuation actually decided at the early stage? At seed there's no spreadsheet truth; valuation is set by market comps, your traction, the strength of the team, and mostly by supply and demand fo... Intermediate 3 resources → What do the key terms in a term sheet actually mean? Term sheets split into economics (valuation, option pool, liquidation preference) and control (board seats, protective provisions, voting). The sca... Advanced 3 resources → How do SAFEs and term sheets differ in India versus the US? India can't use the plain US SAFE directly because of company-law constraints, so founders use the iSAFE (structured as compulsorily convertible pr... Advanced 3 resources → How much dilution should I expect across seed and Series A? Plan for roughly 10-20% dilution per priced round plus the option pool, and remember that stacked SAFEs at different caps all convert at once and c... Intermediate 3 resources →