SAFE Ownership Calculator

A SAFE (Simple Agreement for Future Equity) is a fundraising instrument created by Y Combinator that gives investors the right to receive equity in a future priced round. Unlike a loan, a SAFE has no interest rate, no maturity date, and no repayment obligation. When the startup raises a priced round (like a Series A), the SAFE automatically converts into shares at a price determined by the valuation cap or discount rate — whichever gives the investor a better deal.

A valuation cap sets the maximum valuation at which a SAFE converts into equity. If a SAFE has an $8,000,000 cap and the Series A prices at $20,000,000 pre-money, the SAFE holder converts at the $8,000,000 cap — effectively getting shares at a much lower price per share than the Series A investors. The cap rewards early investors for taking more risk. Lower caps mean more equity for the investor and more dilution for the founder.

MFN stands for Most Favored Nation. An MFN SAFE has no valuation cap or discount — instead, it includes a provision that automatically adopts the best terms from any subsequent SAFE the company issues. If you sign an MFN SAFE and later issue a SAFE with a $10,000,000 cap, the MFN SAFE automatically gets that $10,000,000 cap too. MFN SAFEs are typically used for the earliest checks when the company cannot yet justify setting a cap.

A discount rate gives the SAFE investor a percentage reduction on the share price at the next priced round. A 20% discount means the SAFE holder pays 80% of what Series A investors pay per share. For example, if the Series A price is $2.00 per share, the SAFE holder converts at $1.60 per share. The SAFE converts at whichever mechanism — the valuation cap or the discount — gives the investor a lower price per share.