SAFE (post-money)
A convertible instrument granting future equity at the next priced round, with ownership fixed as a share of the post-money valuation cap.
A SAFE (Simple Agreement for Future Equity) is a convertible instrument created by Y Combinator in 2013 and rewritten as the post-money version in 2018, which is now the default form. It is not debt: there is no interest, no maturity date and no repayment obligation. The investor wires money today and receives a claim that resolves at the next equity round (shares, priced by a valuation cap, a discount, or both), at a change of control (the greater of the money back or the as-converted value), or at dissolution (the money back, ahead of common).
The post-money mechanics are what founders most often misread. The investor’s ownership equals investment divided by the post-money valuation cap, measured on the company’s capitalization including all converting securities (every other SAFE and note), granted and promised options, and the existing unissued pool, but excluding the new money and any pool increase adopted for the round. That makes each SAFE’s ownership a fixed promise at signature: issuing more SAFEs later does not dilute earlier SAFE holders, it dilutes the founders and every non-SAFE holder on the cap table.
Founders choose SAFEs for speed and simplicity: no valuation negotiation beyond the cap, no board seat, a few pages of standard text, closings that can happen investor by investor. The discipline this convenience removes has to be reintroduced by the founder: keep a running fully diluted cap table where every outstanding SAFE is converted at its cap, and read every new cap as a percentage sold, not as a flattering valuation headline.
A quantum company typically stacks several SAFE rounds across technical milestones before a priced Series A, because revenue is years out. Post-money SAFEs make each new cap a hard ownership promise: the dilution lands entirely on the founders, and three stacked SAFEs at 10% each quietly sell 30% of the company before any priced round. Model the full stack in fully diluted terms before signing the next cap, not after.
An investor puts $1,000,000 into a SAFE with a $10,000,000 post-money valuation cap. Ownership promised at conversion: 1,000,000 / 10,000,000 = 10.0%. A second SAFE of $1,500,000 at a $15,000,000 post-money cap promises another 1,500,000 / 15,000,000 = 10.0%. Together the two SAFEs convert into 20.0% of the company at the priced round, before the new lead's money comes in. Both percentages are fixed at signature: later SAFEs dilute the founders, not the earlier SAFE holders.
From definition to decision
Model this in your own round, scenarios, dilution and runway, in the founder workspace.