Fundraising · SAFE mechanics
The post-money SAFE, explained with real dilution math.
YC rewrote the SAFE in 2018 so founders could know exactly how much of their company they were selling. Here's how the post-money cap works, what it costs you when you stack notes, and the four forms you'll actually sign.
The one rule that matters
On a post-money SAFE, your investor's ownership is investment ÷ post-money cap. That's it. $500K on a $10M post cap is 5%, permanently, regardless of what you raise afterwards. Every new SAFE you issue comes out of the founders' pocket — not the earlier investors'.
The pre-money SAFE worked the other way: everyone converted together, so each additional note quietly diluted the earlier notes too. Founders couldn't compute their own cap table. Post-money fixed the clarity problem and shifted the dilution cost onto the founders, which is why stacking six SAFEs is dangerous even when each one "only" costs 3%.
Dilution examples
| Raise | Cap | Investor owns | Notes |
|---|---|---|---|
| $500,000 | $10M post | 5.00% | The canonical seed SAFE. Clean math, no surprises. |
| $500,000 | $20M post | 2.50% | Typical for an AI team with traction out of a hot batch. |
| $1,000,000 | $12M post | 8.33% | Heavier dilution — watch the stack before Series A. |
| $250,000 | $8M post | 3.13% | Pre-launch angel round; expect 2–3 more of these. |
Percentages ignore option-pool expansion at the priced round, which dilutes everyone further.
The four post-money forms
- Valuation cap, no discount — the default. Use this unless you have a reason not to.
- Discount, no valuation cap — rare; investor takes 10–20% off the next round price.
- Valuation cap and discount — investor takes whichever is better for them.
- MFN, no cap and no discount — YC's own $375K tranche. Converts at your best subsequent terms.
All four are free at ycombinator.com/documents. Read the SAFE template breakdown before you edit a single clause — the standard forms get signed same-day, edited ones get sent to a lawyer.
Where founders get burned
- Stacking. Four SAFEs at 4% each is 16% gone before your Series A pool.
- Raising above the cap. A $12M post cap with a $40M Series A means the SAFE holder 3x's on paper — that's the deal, don't renegotiate it.
- Side letters. Pro-rata and information rights attached to a $25K check will haunt every future round.
- Forgetting the pool. Your priced round will demand a 10–15% option pool, usually pre-money. Model it before you sign.
FAQ
What is a post-money SAFE?
A post-money SAFE is YC's 2018 standard convertible instrument. The valuation cap is measured after the SAFE money comes in, which means the investor's ownership percentage is fixed and knowable the day you sign — unlike the older pre-money SAFE, where dilution shifted every time you raised another note.
How do you calculate post-money SAFE dilution?
Divide the investment by the post-money valuation cap. A $500K SAFE on a $10M post-money cap is exactly 5% — no math gymnastics, no reshuffling when a second SAFE lands. Each subsequent SAFE dilutes the founders, not the earlier SAFE holders.
What's the difference between pre-money and post-money SAFEs?
In a pre-money SAFE, the cap excludes the incoming money and all SAFEs convert together, so nobody knows their real ownership until priced round close. In a post-money SAFE, ownership is locked at signing and every new SAFE comes out of the founders' share. Post-money is founder-clearer but founder-costlier if you stack notes.
What cap does YC use?
YC's standard deal is $125,000 for 7% on a pre-agreed basis, plus $375,000 on an uncapped post-money MFN SAFE. The MFN clause means that $375K converts at the best terms of your next priced round or capped SAFE.
What is an MFN SAFE?
Most Favored Nation. The investor takes no cap and no discount up front, but gets the right to adopt the terms of any better SAFE you issue before the next equity round. YC's second $375K tranche uses exactly this structure.
Does a post-money SAFE dilute the option pool?
The post-money cap calculation includes the existing (pre-round) option pool. Any new pool expansion at the priced round dilutes founders and SAFE holders, unless negotiated into the pre-money shuffle.
Keep reading
Deep dive
The YC SAFE, Explained →
Post-money SAFE mechanics, cap tables, and what founders actually sign.
Fundraising
SAFE Note Template →
The four free post-money SAFE forms, and which one to sign.
Deep dive
The $500K YC Deal →
How the standard $125K + $375K SAFE actually works.
Playbook
YC Equity Split for Co-Founders →
Why YC pushes 50/50 splits, when to deviate, and vesting basics.
Guide
How Y Combinator Works →
The $500K deal, 3-month program, and acceptance rate — in plain English.
Pillar
The Y Combinator Application →
The complete pillar guide: questions, deadlines, video, interview, odds.