Price & valuation
Post-money SAFE
The current standard SAFE, in which the valuation cap is a post-money figure — so your percentage of the company is fixed at signing and cannot be diluted by other SAFEs issued afterwards.
In plain English
Y Combinator replaced its original pre-money SAFE with a post-money version in 2018 because the pre-money version had become unworkable. Under a pre-money cap, every additional SAFE the company issued diluted every earlier SAFE holder, and nobody — including the founders — could calculate anyone's ownership until the priced round finally happened and a lawyer modelled the whole stack simultaneously.
The post-money version fixes your percentage on the day you sign. Divide your investment by the post-money cap and that is what you own at conversion, full stop. Another investor arriving later at a different cap does not touch you. The certainty is genuine and it is the reason the format won.
The dilution did not disappear; it moved. Under a post-money SAFE, every subsequent SAFE dilutes the founders and the existing shareholders only. A company that raises four successive post-money SAFEs can find that the combined promised percentages are far larger than anyone tracked, and the reckoning arrives all at once at the priced round. Founders have been genuinely shocked by this arithmetic.
For you the practical consequence is asymmetric and favourable: your number is safe, but the company's cap table may be under more strain than the founders realise, and that strain shows up as pressure in the priced round negotiation.
What it means for your cheque
Prefer the post-money version. It is the market standard, it is the founder-proposed default in most US deals, and it gives a small cheque the one thing small cheques never otherwise get — certainty about what they own.
The trap is comparing caps across formats. A $10m post-money cap is a worse deal for you than a $10m pre-money cap on the same round, because the post-money denominator is larger. When a founder moves from a pre-money to a post-money cap at the same headline number, they have quietly raised the price.
Do the arithmetic
Pre-money and post-money caps at the same headline number
You invest $100,000 at a $10m cap. The company also issues $900,000 of other SAFEs at the same cap before the priced round.
| Post-money cap — your ownership | $100,000 ÷ $10m = 1.00%, fixed |
|---|---|
| Post-money cap — after the other $900k of SAFEs | still 1.00% |
| Pre-money cap — your ownership before the others | $100,000 ÷ $10m = 1.00% |
| Pre-money cap — after $900k more converts alongside | about 0.92%, since all SAFEs share the pre-money pie |
| Who absorbs the difference under the post-money version | the founders and existing shareholders |
The post-money SAFE protected your percentage and pushed the cost onto the founders. That is the whole design, and it is why founders should count their outstanding SAFEs more carefully than most do.
At the table
What to negotiate
- Confirm in writing which version you are signing — the documents look almost identical and the defined term is easy to skim past.
- Ask for the total amount of SAFEs the company intends to raise before the priced round, not just what is outstanding today.
- If a founder switches from a pre-money to a post-money cap at the same number, treat it as a price increase and negotiate accordingly.
- Ask for pro-rata rights in a side letter. The post-money SAFE removed the pro-rata right that the earlier version contained.
- Model what the founders own after all outstanding SAFEs convert. Founders below roughly 50% before a Series A is a real risk to the company's ability to raise.
Around the world
How this differs by market
The default. Y Combinator's post-money template is used essentially unmodified across US pre-seed.
LATAMStandard wherever there is a Delaware parent, which is most venture-backed companies in the region.
EULess used, since UK investors favour the ASA for tax reasons and continental rounds tend to price earlier.
APACCommon in Singapore and Australia. Local-law adaptations circulate and are not always faithful to the original — read them properly.
Post-money SAFE: common questions
Which SAFE version am I being offered?
Does a post-money SAFE mean I can never be diluted?
Why would a founder ever prefer the post-money version?
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