Company setup and early instruments
Post-money SAFEs
Ownership at the cap is investment divided by cap, and later SAFEs dilute founders rather than earlier SAFE holders.
YC's original 2013 SAFE was pre-money. In 2018 YC switched the standard forms to post-money SAFEs so founders and investors could read ownership off the page. Unless an investor forces a legacy form and counsel agrees, use post-money.
Post-money SAFE ownership (at the cap), before the priced round's new money and new option pool:
SAFE ownership % = Investment / Post-money valuation capConcept
For a post-money SAFE, the holder's ownership of Company Capitalization at conversion is Investment / Cap. That capitalization includes outstanding stock, the existing option pool (issued and unissued) and other convertibles converting in the same round. It excludes the new money in the priced round and the new or increased option pool created for that round.
The big idea
A labeled slice of pie is the picture. "$1M on a $10M post-money cap" is a 10% slice, written down at signing. The analogy breaks at Series A: new money and a refreshed pool shrink that slice. The 10% was never "10% after Series A."
Pre-money SAFEs defined the cap differently; later SAFEs diluted earlier SAFE holders in ways that surprised everyone. Post-money SAFEs fix each holder's percentage up front; founders absorb dilution from subsequent SAFEs. Clarity for investors, discipline required from founders who keep signing new SAFEs at low caps.
Trade-off
Clarity of ownership is worth more than a legacy pre-money form. If you must mix forms, model conversion carefully — do not assume percentages add the way post-money math does.
Walking through two SAFEs
Example
Round 1: $1M at $10M post cap → 10%.
Round 2: $2M at $20M post cap → 10%.
Combined SAFE holders ≈ 20% before Series A new money and the new option pool. Founders who thought they "only sold 10%" are wrong after the second SAFE.
If those had been pre-money SAFEs, the interaction would differ — another reason to stay on one form family. Full share counts are in SAFE conversion math.
On a standard equity financing, YC post-money SAFEs convert into shares of preferred stock issued in that round. The SAFE holder does not usually renegotiate full Series A protective provisions from scratch — they ride the round's preferred terms per the form.
Common mistakes
- Reading 10% as post-Series A ownership. It is pre-new-money and pre-new-pool.
- Mixing pre- and post-money forms and adding the percentages anyway.
- Assuming later SAFEs dilute earlier SAFE holders. On post-money forms, they dilute common.
Check yourself
You raise $1M on a $10M post-money SAFE, then $2M on a $20M post-money SAFE. About what % have you sold to SAFE holders before Series A?
About 20%. The percentages stack; founders absorb the second 10%.
Does that 20% include the Series A investor's new money?
No. Company Capitalization excludes the new priced-round money and the new or increased option pool.
Key takeaways
- Post-money ownership at the cap is
investment / cap. - Later post-money SAFEs dilute founders, not earlier SAFE holders.
- Stay on one form family; mixed forms do not add the same way.
Further learning
Next, caps and discounts.
Related
SAFEs
The post-money SAFE as a right to future equity — valuation caps, discounts, MFN, pro-rata side letters and the ownership math founders must run before signing.
SAFE caps and discounts
The valuation cap, the discount, "better of," uncapped SAFEs, and when each one actually binds.
SAFE conversion math
Stack post-money SAFEs, convert them in a priced round with an option pool, and work share counts and ownership before and after Series A.