SAFE calculator

How it works

A SAFE (simple agreement for future equity) turns into shares at the next priced round. The holder gets the better of two prices: the price implied by the valuation cap, or the round price less the discount. Whichever gives the lower valuation, and therefore more shares, applies.

Under the post-money SAFE, the cap is a post-money figure for the SAFE money: a $500,000 SAFE at a $10 million post-money cap buys 5% of the company as it stands just before the new round. The new investors then dilute everyone, the SAFE holder included.

The formula

1. Compute the discounted valuationNext round pre-money x (1 - discount).
2. Pick the lower of cap and discounted valuationThat is the effective valuation for conversion.
3. Divide the SAFE by the effective valuationSAFE stake before new money = SAFE amount / effective valuation; multiply by pre-money / post-money for the stake after the round.

Worked example

A $500,000 SAFE with a $10 million cap and a 20% discount, converting in a round at $20 million pre-money: the discounted valuation is $16 million, so the cap ($10 million) applies. The SAFE converts into 5% before new money and 4% after a $5 million raise.

Put the numbers in your data room

Keep every signed SAFE, its cap, discount and any side letter in the cap table folder of your data room, with a register that lists them all. At the priced round, the lead investor's counsel rebuilds this calculation from those files.

SAFE calculator FAQ