Instruments & cap table

SAFE (post-money)

A convertible instrument granting future equity at the next priced round, with ownership fixed as a share of the post-money valuation cap.

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A SAFE (Simple Agreement for Future Equity) is a convertible instrument created by Y Combinator in 2013 and rewritten as the post-money version in 2018, which is now the default form. It is not debt: there is no interest, no maturity date and no repayment obligation. The investor wires money today and receives a claim that resolves at the next equity round (shares, priced by a valuation cap, a discount, or both), at a change of control (the greater of the money back or the as-converted value), or at dissolution (the money back, ahead of common).

The post-money mechanics are what founders most often misread. The investor’s ownership equals investment divided by the post-money valuation cap, measured on the company’s capitalization including all converting securities (every other SAFE and note), granted and promised options, and the existing unissued pool, but excluding the new money and any pool increase adopted for the round. That makes each SAFE’s ownership a fixed promise at signature: issuing more SAFEs later does not dilute earlier SAFE holders, it dilutes the founders and every non-SAFE holder on the cap table.

Founders choose SAFEs for speed and simplicity: no valuation negotiation beyond the cap, no board seat, a few pages of standard text, closings that can happen investor by investor. The discipline this convenience removes has to be reintroduced by the founder: keep a running fully diluted cap table where every outstanding SAFE is converted at its cap, and read every new cap as a percentage sold, not as a flattering valuation headline.

In Canada

Canadian founders often raise on the YC post-money form in USD, sometimes into a Delaware parent after a flip, while the payroll burning that money runs in CAD; the cap, the ownership promise and the exchange rate have to live in the same model. Because Canadian rounds are typically smaller, a stack of SAFEs reaches a meaningful percentage of the company sooner than the same count would in the US. The post-money mechanics do not change with geography: each cap is a hard ownership promise, later SAFEs dilute the founders, and only a fully diluted table converting every outstanding SAFE shows the real position before a priced round. A Delaware flip that puts a US parent on top also ends CCPC status, with consequences for SR&ED refundability worth pricing before the flip, not after.

Run the numbers

An investor puts CA$1,000,000 into a SAFE with a $10,000,000 post-money valuation cap. Ownership promised at conversion: 1,000,000 / 10,000,000 = 10.0%. A second SAFE of $1,500,000 at a $15,000,000 post-money cap promises another 1,500,000 / 15,000,000 = 10.0%. Together the two SAFEs convert into 20.0% of the company at the priced round, before the new lead's money comes in. Both percentages are fixed at signature: later SAFEs dilute the founders, not the earlier SAFE holders.

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Updated July 9, 2026. Open this term in the app →