Since early 2022, YC's standard deal has been $500,000 — but that money comes in two pieces with very different terms. Most founders sign it without fully understanding the second half. Here's the whole picture.
The two SAFEs
| Component | Amount | Instrument | Terms |
|---|---|---|---|
| Tranche 1 | $125,000 | Post-money SAFE | 7% of the company on a post-money basis |
| Tranche 2 | $375,000 | MFN (Most-Favored-Nation) SAFE | Uncapped; converts at the terms of your next priced round |
What the dilution actually looks like
The first $125K is straightforward: YC owns 7% the moment you sign. The second $375K is where founders get confused. Because it's an MFN SAFE with no cap, it converts at whatever cap you raise your next round at. In practice, total YC dilution at the time of your seed round is usually 8.5% to 9.5%.
| Seed post-money cap | MFN SAFE dilution | Total YC ownership |
|---|---|---|
| $10M | 3.75% | ~10.75% |
| $15M | 2.50% | ~9.50% |
| $20M | 1.88% | ~8.88% |
| $30M | 1.25% | ~8.25% |
Gotchas founders miss
- The 7% post-money SAFE means YC's stake stays at 7% if you raise more SAFEs before a priced round — those new SAFEs dilute you, not YC.
- Pro-rata: YC has the right to maintain its ownership in your next round. They almost always exercise it.
- The MFN auto-converts at your next priced round.
- You don't have to take all $500K. You can sign just the $125K tranche.
Key takeaways
- YC's deal is $500K total: $125K for 7% post-money + $375K MFN SAFE.
- Real total dilution lands at ~8.5–9.5% after a typical seed.
- Raise at a higher seed cap and the MFN dilution shrinks meaningfully.
- YC's 7% is post-money, so additional pre-priced SAFEs dilute you, not them.