A SAFE — a Simple Agreement for Future Equity — is not a loan and not stock: it is a promise from a startup to issue you preferred shares later, at a price that is locked in by either a valuation cap or a discount. When the company eventually runs a priced round (usually a Series Seed or Series A), your SAFE converts into shares of that preferred stock, and the number of shares you receive depends on which of the two protections — the cap or the discount — gives you the lower conversion price.
This calculator shows that conversion math in plain dollars. Enter what you invested, the cap on your SAFE, the discount rate, and the pre-money valuation of the next priced round, and you will see the per-share price, the total shares issued to you, your ownership percentage, and which protection (cap or discount) actually fired.
How to Use
- Type your Investment Amount — the dollars you wired into the SAFE at signing. This is the principal, not a valuation.
- Set the Valuation Cap. It is the maximum pre-money valuation at which your SAFE can convert. A lower cap is better for you because it locks in a lower price per share.
- Enter the Discount Rate — usually 10%–30%. If your SAFE has no discount, leave it at 0. The discount reduces the next-round price by that percentage.
- Fill in the Next Round Pre-Money Valuation — the priced-round valuation agreed between the startup and the new lead investor. This is what the SAFE converts against.
- Adjust Existing Fully Diluted Shares only if you know the company's cap-table count. The default of 10,000,000 fully diluted shares is a common seed-stage figure and is enough to compare scenarios.
The engine computes two candidate prices per share: the cap price (cap divided by existing shares) and the discounted price (next-round price times one minus the discount). It picks the lower of the two — because that is the price that issues you the most shares — and reports it as the effective conversion price, the total SAFE shares, and your post-conversion ownership percentage.
The SAFE Conversion Formula
Two prices are always in play:
- Cap price per share = Valuation Cap ÷ Existing Fully Diluted Shares.
- Discount price per share = Next-Round Price per Share × (1 − Discount).
Your effective conversion price is the minimum of the two:
P_effective = min(Cap ÷ S, (V_pre ÷ S) × (1 − d))
Where V_pre is the next-round pre-money valuation, S is the existing fully diluted share count, and d is the discount. Then:
- SAFE shares issued = Investment ÷ P_effective.
- Your ownership % = SAFE shares ÷ (Existing shares + SAFE shares).
When the next-round pre-money valuation is well above the cap, the cap always wins. When it is below the cap, the discount usually wins — and sometimes both protections line up to nearly the same price.
Examples
Example 1 — The headline seed. You invested $500,000 into a SAFE with an $8,000,000 cap and a 20% discount. The company later raises a priced round at a $12,000,000 pre-money valuation on 10,000,000 existing shares. The next-round price is $1.20 per share; the cap price is $0.80; the discounted price is $1.20 × 0.80 = $0.96. The cap wins at $0.80 per share, so you receive 625,000 shares and own about 5.88% of the company post-conversion.
Example 2 — Discount wins below the cap. Same $500,000, $8,000,000 cap, and 20% discount, but the priced round only prices at $6,000,000 pre-money. Next-round price is $0.60; cap price is still $0.80; discounted price is $0.60 × 0.80 = $0.48. The discount wins. You receive 1,041,667 shares and your ownership rises to about 9.43% — illustrating why a low-valuation down round is actually favorable to an early SAFE holder.
Example 3 — Large check, large cap. A $5,000,000 SAFE against a $25,000,000 cap with a 20% discount, converting into a $30,000,000 pre-money round on 10,000,000 shares. Next-round price is $3.00; cap price is $2.50; discounted price is $2.40. The discount narrowly wins at $2.40 per share, issuing roughly 2,083,333 shares and an ownership of about 17.24%.
FAQ
What is a SAFE in simple terms?
A SAFE (Simple Agreement for Future Equity) is a contract between an investor and a startup that promises preferred stock later, usually at a priced financing round. It is not debt — there is no interest, no maturity date, and no repayment obligation — and it is not preferred stock itself, because no shares are issued at signing.
How does a SAFE convert into shares?
When the startup closes a priced round, the SAFE converts at the lower of two prices: the valuation cap price or the discount price. The investor's principal is divided by that effective price per share, and the resulting number of preferred shares is issued to them. This calculator replicates that min(cap, discount) rule.
Is the valuation cap a pre-money or post-money figure?
In modern YC-style post-money SAFEs, the cap is anchored to the post-money capitalization including all SAFEs and notes, which means the cap you signed effectively fixes your ownership percentage. In older pre-money SAFEs, the cap is pre-money and your ownership gets diluted by subsequent SAFEs. Most SAFEs issued after 2018 are post-money; read your specific instrument to confirm.
When does the cap beat the discount?
The cap wins whenever the cap price per share is lower than the discounted next-round price. In practice, that happens when the priced-round valuation is comfortably above the cap — typically when the round pre-money is more than cap ÷ (1 − discount). For a 20% discount, the crossover happens when pre-money exceeds roughly 1.25× the cap.
What happens if the company never raises a priced round?
If there is no priced round, the SAFE does not automatically convert into common stock. In a sale or dissolution, post-money SAFE holders typically have pro-rata participation rights up to their invested amount (often a 1× return), after which remaining proceeds go to common. If the company shuts down with no money, the SAFE is usually worthless.
Does a SAFE have interest or a maturity date?
No. Unlike a convertible note, a classic SAFE has no interest accrual and no maturity date. The SAFE remains open until a conversion event (priced round, sale, or dissolution) occurs. Some newer "SAFE cap note" variants do add interest, but the standard YC SAFE does not.
Can I model multiple SAFEs on this calculator?
This tool computes a single SAFE in isolation. If several SAFEs and notes convert in the same priced round, the company's cap table stacks them, and each one's ownership percentage is computed against the post-money fully diluted capitalization including all of them. For a multi-instrument model you need a full cap-table spreadsheet.
Disclaimer
This SAFE calculator is provided for informational purposes only and does not constitute legal, tax, investment, or accounting advice. It assumes a simplified single-SAFE conversion model; actual outcomes depend on your specific SAFE instrument, the company's cap table, the priced round's terms, side letters, pro-rata rights, and the jurisdiction of incorporation. Valuation caps, discounts, and ownership percentages are illustrative. Always review your SAFE with a qualified startup attorney and confirm conversion math directly with the company's counsel before relying on it.