Does the cap or the discount apply?

Whichever produces the lower price per share, and therefore more shares for the SAFE holder. Standard SAFEs apply one or the other, not both together.

What is the difference between a pre-money and post-money SAFE?

A post-money SAFE fixes the holder's percentage of the company at conversion, so subsequent SAFEs dilute the founders rather than each other. A pre-money SAFE does not, so stacked SAFEs share the dilution. The distinction changes the outcome materially when several SAFEs are outstanding.

Are these results binding?

No. They are illustrative only. Actual conversion depends on the exact SAFE wording, whether the pool is refreshed, how the round is priced and any most-favoured-nation terms. This is not legal advice.

Free tool

SAFE calculator

Model the conversion of a SAFE at a priced round. The calculator compares the cap-implied price with the discounted round price and converts at the lower of the two, then shows the resulting ownership and dilution.

Fully diluted shares before conversion

SAFE amount

Valuation cap

Discount (%)

0 if none

Round pre-money valuation

Round amount raised

Cap-implied price per share: 0.555556
Discounted round price per share: 1.422222
Conversion price per share: 0.555556
Shares issued to the SAFE holder: 900,000
Fully diluted after conversion: 9,900,000
SAFE holder ownership: 9.09%

How this is calculated

Round price per share = round pre-money valuation ÷ fully diluted shares before conversion.
Discounted round price = round price × (1 − discount).
Cap-implied price = valuation cap ÷ fully diluted shares before conversion.
Conversion price = the lower of the two, which gives the holder more shares.
SAFE shares = SAFE amount ÷ conversion price; ownership = SAFE shares ÷ post-conversion fully diluted shares.
This models one SAFE with no accrued interest. Stacked SAFEs and notes interact with each other and should be modelled on your real cap table.

Worked example

A £500k SAFE with a £5m cap and a 20% discount converts at a round priced on a £16m pre-money over 9,000,000 shares. The round price is £1.778, the discounted price £1.422 and the cap price £0.556. The cap wins: the SAFE converts into about 900,000 shares, roughly 9.1% of the company before the new money arrives.

Assumptions

A single SAFE converting at one priced round.
Conversion is at the lower of the cap-implied price and the discounted round price.
The cap price is computed on the pre-round fully diluted share count.
The SAFE converts into the same class the round prices.

Limitations

Does not model interest or a maturity date, so it is not a convertible note.
Does not model a stack of SAFEs on different caps converting together.
Does not apply MFN clauses, pro-rata side letters or post-money SAFE mechanics where the cap is fixed after conversion.
Does not include a pool increase agreed as part of the same round.

Prepared by Perseids for general information. This tool runs on the numbers you enter, stores nothing and uses no company data. Results are illustrative and are not legal, tax or investment advice.

Run the same model on your real cap table, with your actual instruments.

Model this on your actual cap table in Perseids

Frequently asked questions

Does the cap or the discount apply?: Whichever produces the lower price per share, and therefore more shares for the SAFE holder. Standard SAFEs apply one or the other, not both together.
What is the difference between a pre-money and post-money SAFE?: A post-money SAFE fixes the holder's percentage of the company at conversion, so subsequent SAFEs dilute the founders rather than each other. A pre-money SAFE does not, so stacked SAFEs share the dilution. The distinction changes the outcome materially when several SAFEs are outstanding.
Are these results binding?: No. They are illustrative only. Actual conversion depends on the exact SAFE wording, whether the pool is refreshed, how the round is priced and any most-favoured-nation terms. This is not legal advice.