Post-Money SAFE

A SAFE whose conversion ownership is calculated against the company's valuation including all SAFE money, so each holder's percentage is fixed before the priced round.

Example

A 500,000 SAFE with a 5,000,000 post-money cap converts to 10% of the company just before the priced round.

Important

Additional post-money SAFEs dilute founders and other shareholders, not earlier SAFE holders.

Related terms

  • SAFE (Simple Agreement for Future Equity) — A contract that gives an investor the right to receive shares in the future, at a price set by a formula, rather than issuing shares immediately. It is not debt and carries no interest or maturity date.
  • Valuation Cap — The maximum company valuation a SAFE or convertible note's conversion price can be based on, protecting the early investor from paying a later round's higher price.
  • Dilution — The reduction in your percentage ownership of a company when it issues new shares to someone else.

Lessons that explain it

  • A SAFE is a promise of future shares, and post-money SAFEs stack on the founders — A SAFE gives an investor the right to shares at a future priced round, usually at a valuation cap. With post-money SAFEs, each additional SAFE dilutes the founders rather than earlier SAFE holders. (12 min)
  • The cap table in the deck must match the legal records — Cap table verification reconciles the spreadsheet with the share register, board approvals, option grants and outstanding convertibles, so investors know exactly what they own after the round. (11 min)

All 578 terms in the Investing glossary