SAFE Note vs Priced Round Dilution
SAFEs (Simple Agreement Future Equity) convert at next priced round. Pre-money SAFEs share dilution with new investors. Post-money SAFEs (YC 2018+) lock investor stake. This compares.
| SAFE amount | — |
| Valuation cap | — |
| Conversion price | — |
| SAFE post-conversion | — |
| Round investor stake | — |
| Total dilution at A | — |
SAFEs (Simple Agreement for Future Equity) convert at next priced round. YC introduced post-money SAFE in 2018 — investor's stake is locked regardless of round size. Pre-money SAFEs share dilution with new investors.
Pre-Money vs Post-Money SAFE
Pre-money SAFE converts INTO pre-money — dilution shared with new investor + founders. Post-money SAFE percentage locked at cap — founders bear all dilution from new round.
Valuation Cap
SAFE converts at lower of cap or round price. Lower cap = better SAFE investor return + more founder dilution. $5M cap on $20M Series A = SAFE doubles.
Stacking Multiple SAFEs
Most startups raise 5-15 SAFEs pre-Series A. Total combined SAFE % can be 15-25% at conversion. Tightly track total promised SAFE allocation.
MFN (Most Favored Nation)
SAFE feature: if you issue a SAFE with better terms (lower cap, discount), prior SAFEs upgrade. Always plan SAFE terms with awareness of MFN compatibility.
Last updated May 2026. Sources: YC SAFE Documents, NVCA Templates.