SAFE Guide™
SAFEs are the most common early-stage fundraising instrument — but most founders signing them don't fully understand how the math works until the Series A, when it's too late to renegotiate. This guide explains every term, the pre- vs post-money difference, and how to negotiate from a position of knowledge.
What's inside
- How SAFEs work — the conversion mechanics explained with examples at typical seed and Series A valuations
- Pre-money vs post-money SAFE — side-by-side comparison with math showing dilution under each structure
- Valuation cap analysis — how to think about cap relative to your runway and expected Series A valuation
- Discount mechanics — when discounts are better than caps and how to model the outcome
- MFN clause explained — what most favored nation means and when it triggers
- Pro-rata rights — what they mean for your future rounds and how to negotiate them
- SAFE vs convertible note comparison — interest, maturity, complexity and use cases for each
- Negotiation strategy — market-standard terms at pre-seed vs seed, what's negotiable and what isn't
Who this is for
Get SAFE Guide™
Fill in the details below — we'll send it to your email immediately.
Frequently asked questions
What is the difference between a pre-money and post-money SAFE?
In a pre-money SAFE, the cap is applied to the pre-money valuation — so SAFE investor ownership varies with round size. In YC's post-money SAFE (now the standard), SAFE investors know their ownership percentage at signing, regardless of the next round size. The guide has side-by-side math illustrating the difference.
What is a valuation cap and why does it matter?
The cap is the maximum price at which a SAFE converts. If your cap is $5M and you raise a Series A at $20M, the SAFE investor converts at $5M — getting 4x more equity than Series A investors per dollar invested. It's the key economic term in a SAFE and determines your dilution at conversion.
Should I use a SAFE or a convertible note?
SAFEs are simpler (no interest rate, no maturity date) and have become the market standard for pre-seed and seed rounds. Convertible notes have interest (5–8%) and a maturity date that creates pressure to close a priced round. For most startups, a post-money SAFE is the right instrument.
Structuring a seed round? We'll advise on instrument selection, terms and cap table modeling.