SAFE conversion math

Percentages on a SAFE feel simple: $1M on a $10M post-money cap is 10%. The pain starts when you stack several SAFEs, then run a Series A with a refreshed option pool. This is the arithmetic so you can rebuild it in a spreadsheet without guessing.

Concept

For a post-money SAFE, ownership of Company Capitalization at conversion is Investment / Cap. That capitalization includes outstanding stock, the existing option pool, and other convertibles converting in the same round — and excludes the new money in the priced round and the new or increased option pool created for that round.

Prereq: SAFE mechanics. Downstream: priced rounds and cap tables.

Step	Concept	What it answers
1	Stacking post-money SAFEs	How do two SAFEs become share counts?
2	Cap vs discount at conversion	Which price does each SAFE actually use?
3	SAFEs into Series A	What happens when you add new money and a 10% pool?

In the worked case, founders go 100% → 80% → 56%. SAFE holders go from a promised 20% post-SAFE to 14% post-round — the pool and new money diluted them too. If you promised an employee "1% of the company" from founder-only math, you understated dilution.

Spreadsheet shape

Three blocks beat a clever one-cell formula.

Convertible ledger: investor, amount, cap, discount, MFN, side letter. pct = Amount/Cap; sum_pct = SUM(pct).

SAFE conversion: T_safe = existing_shares / (1 - sum_pct), then SAFE_i_shares = pct_i × T_safe.

Priced round: series_pct = new_money / post_money; remaining for old holders = 1 - series_pct - pool_pct; T = (existing + SAFE shares) / old_pct. Compare each SAFE's implied price to PPS × (1 − discount) and re-solve if the form says "better of."

Use YC's calculator to cross-check the sheet, not to replace understanding. Signed forms and counsel beat blog arithmetic when documents conflict.

As a founder, keep a live as-converted cap table after every SAFE. As an employee evaluating an offer, ask for fully diluted % including convertibles and the unissued pool. Walking through "$1M on $10M post plus $2M on $20M post → 20%, then Series A dilutes further" is a crisp test of whether someone understands seed instruments.

Common mistakes

Quoting ownership to employees without SAFEs. Always show as-converted plus pool.
Treating SAFE % as post-Series A %. It is pre-new-money / pre-new-pool.
Mixing pre- and post-money forms. Percentages do not stack the same way.
Ledger drift. A signed SAFE not in the spreadsheet becomes archaeology on conversion day.

Key takeaways

Post-money SAFE percentages stack; founders absorb later SAFEs.
Convert with T = existing / (1 − sum_SAFE_%), then allocate pct × T shares per SAFE.
Model Series A as simultaneous new money % + post-money pool %.
Never quote ownership without the convertible stack.