SAFEs, notes and angel rounds
SAFE Dilution Calculator Explained: How Stacked SAFEs Convert (With Examples)
The short answer
To estimate SAFE dilution, add up purchase amount divided by post-money cap for every post-money SAFE: that sum is roughly the percentage of the company the SAFE holders will own just before the priced round, and it comes entirely out of the founders' and other existing holders' share. In the priced round, new investors and any option pool increase then dilute everyone, SAFE holders included. In the example below, $3M of SAFEs at a $10M post-money cap leaves founders with 62.2% before the round and 47.2% after a $5M Series A with a 10% pool, compared with 52.3% if the same SAFEs had been pre-money.
Key numbers
| Metric | Figure | Source and date |
|---|---|---|
| Post-money SAFEs as a share of all SAFEs | 82% | Carta, July 2025 |
| Median post-money cap, $250K to $1M rounds | About $10M | Carta, 2025 |
| Median post-money cap, $1M to $2.5M rounds | About $15M | Carta, 2025 |
| Median dilution in a priced seed round | 19.5% | Carta, 5,118 US rounds, 2025 |
| Median seed-stage option pool | 11.8% | Carta, 2025-2026 |
| Rule of thumb for total SAFE dilution before a Series A | Keep it under about 20% to 25% | Practice; larger overhangs complicate pricing |
The one formula you need
For a post-money SAFE:
SAFE ownership just before the priced round = purchase amount / post-money valuation cap
Add this up for every post-money SAFE. If the total is 25%, the founders, employees and pool together will own 75% just before the round, whatever the number of SAFEs.
The conversion price is: SAFE price = post-money cap / Company Capitalization, where the Company Capitalization includes all shares, options, the unissued pool and all converting securities, including the SAFEs. Because the SAFE shares are part of that denominator, the math is circular, but it simplifies: total capitalization = existing fully diluted shares / (1 - total SAFE percentage).
Worked example, step 1: stacking three SAFEs
Starting point. Acme has 8,000,000 founder shares and a 1,000,000 share option pool (unissued), so 9,000,000 shares fully diluted.
SAFEs raised over 12 months, all post-money with a $10,000,000 cap:
| SAFE | Amount | Cap | Ownership = amount / cap |
|---|---|---|---|
| Angel group | $500,000 | $10M | 5% |
| Seed fund | $1,000,000 | $10M | 10% |
| Second fund | $1,500,000 | $10M | 15% |
| Total | $3,000,000 | 30% |
Capitalization including SAFEs = 9,000,000 / (1 - 0.30) = 12,857,143 shares. SAFE price = $10,000,000 / 12,857,143 = $0.7778 per share. SAFE shares = $3,000,000 / $0.7778 = 3,857,143. Founders = 8,000,000 / 12,857,143 = 62.2%. Pool = 7.8%. SAFEs = 30.0%.
Notice that the angel group's 5% did not shrink when the funds came in. Under the post-money form, the angels are protected from later SAFE dilution; the founders are not.
Step 2: the same SAFEs on pre-money terms
With a pre-money $10M cap, the conversion price uses the capitalization before the SAFEs: $10,000,000 / 9,000,000 = $1.1111 per share.
SAFE shares = $3,000,000 / $1.1111 = 2,700,000. Total = 11,700,000. Founders = 8,000,000 / 11,700,000 = 68.4%. SAFEs = 23.1%.
Same money, same nominal cap, 6.2 points more for the founders. The difference is that pre-money SAFE holders dilute each other.
Pre-money SAFE definitions vary by form (some include the new pool or the round's convertible securities in the denominator), so always read the definition of capitalization in the document you are signing.
Step 3: conversion in a Series A with a pool top-up
The company now raises a $5,000,000 Series A at a $20,000,000 pre-money valuation ($25M post, so the investor buys 20%). The lead requires an unissued option pool equal to 10% of the post-money capitalization, created before the round (inside the pre-money). See the option pool shuffle.
Under the YC post-money SAFE, the SAFE share count is fixed before the pool increase. The new pool and the new money then dilute everyone. The solving formula: let T be the post-closing fully diluted shares and S the existing shares other than the pool (founders plus converted SAFEs). Then T = S / (1 - investor % - pool %).
Post-money SAFEs - S = 8,000,000 + 3,857,143 = 11,857,143 - T = 11,857,143 / (1 - 0.20 - 0.10) = 16,938,776 - Series A shares = 20% x T = 3,387,755; price per share = $5,000,000 / 3,387,755 = $1.4759 - Pool after the round = 10% x T = 1,693,878 (a top-up of 693,878) - Check: SAFE price $0.7778 is below the round price, so the SAFEs convert at the cap.
| Holder | Shares | Ownership |
|---|---|---|
| Founders | 8,000,000 | 47.2% |
| SAFE holders | 3,857,143 | 22.8% |
| Series A | 3,387,755 | 20.0% |
| Option pool | 1,693,878 | 10.0% |
| Total | 16,938,776 | 100% |
Pre-money SAFEs (same terms) - S = 8,000,000 + 2,700,000 = 10,700,000; T = 10,700,000 / 0.70 = 15,285,714 - Series A shares 3,057,143; price $1.6355 - Founders 52.3%, SAFEs 17.7%, Series A 20.0%, pool 10.0%
The headline: the founders end the Series A with 47.2% under post-money SAFEs and 52.3% under pre-money SAFEs. Both are above Carta's median founding team ownership after a Series A (36.6%), but this company raised only one SAFE round and one priced round.
What the calculator needs from you
- Fully diluted shares today (issued shares, outstanding options, unissued pool).
- Each SAFE: amount, cap, discount, post-money or pre-money, MFN.
- Any convertible notes: principal, interest rate, start date, cap, discount.
- The expected priced round: pre-money valuation, new money, target pool size and whether the pool is in the pre-money.
Startup Engine's simulator handles all of this, including the circular calculation when some SAFEs convert at the cap and others at the round price or discount.
When a SAFE converts at the round price instead of the cap
If the priced round's price is lower than the SAFE's cap price, the SAFE converts at the round price, or at the discounted price if it has a discount. In that case the SAFE holder no longer has a fixed percentage; it simply buys shares like the new investor. A calculator must check each SAFE: compare the cap price, the discount price and the round price, and use the lowest applicable one. Because the round price depends on how many shares the SAFEs receive, the check may need a few iterations.
Practical guidance
- Track the running total. Before each new SAFE, add its amount divided by its cap to your running SAFE percentage.
- Raise caps as traction grows. Later SAFEs at higher caps dilute you less per dollar.
- Watch the overhang. Total SAFE ownership above 20% to 25% may push a Series A lead to ask for a lower pre-money or larger pool.
- Mind the shadow preference. SAFEs that convert at a low cap get preferred stock with a liquidation preference often equal to the purchase amount; the standard YC SAFE handles this by converting into a sub-series with a preference based on the SAFE price.
Frequently asked questions
How do I calculate dilution from a post-money SAFE?
Divide the purchase amount by the post-money valuation cap. A $1M SAFE at a $10M post-money cap equals about 10% of the company just before the priced round, and that 10% comes out of the existing holders.
Do later SAFEs dilute earlier SAFE holders?
Not under the post-money SAFE: each holder's percentage is fixed by its own cap. Under pre-money SAFEs, SAFE holders converting together dilute each other.
Do SAFE holders get diluted by the Series A?
Yes. The new money and any option pool increase made in the priced round dilute SAFE holders along with founders. Only the stacking of other SAFEs is excluded.
Is the option pool increase included in the post-money SAFE capitalization?
Generally no. The YC post-money SAFE excludes pool increases made in connection with the priced round, except to cover promised options, so the new pool dilutes the SAFE holders too.
How much total SAFE dilution is too much?
There is no fixed limit, but many Series A investors become uncomfortable when SAFEs and notes convert into more than about 20% to 25% of the company, because it leaves less room for the new round and for founders.
Can a SAFE convert at a price higher than the cap?
No. The cap is the maximum valuation for conversion. If the round is priced below the cap, the SAFE converts at the round price or at the discount, whichever is lower.