YC SAFE Template Guide: Post-Money Forms, User Guide, and Dilution Checklist
Everything you need to understand and use SAFEs for startup fundraising. Includes differences between pre-money and post-money SAFEs, conversion examples, and best practices.
Y Combinator publishes three official US post-money SAFE agreement templates plus a post-money user guide: valuation cap with no discount, discount with no valuation cap, and an MFN form with neither. Start with the official forms and guide, choose the version that matches the negotiated terms, obtain board approval before issuing it, use the optional pro rata side letter only when agreed, then record the signed SAFE and model its dilution.
Official YC SAFE template and post-money user guide: choose the right form
Y Combinator publishes the official SAFE agreement templates and post-money user guide linked below. SparkLaunch's independent checklist helps you choose a form and organize the financing record. Use the calculator to explore ownership before updating your cap table.
Choose one of the three official post-money SAFE forms
Use the valuation-cap form when the deal has a cap but no discount, the discount form when it has a discount but no cap, or the MFN form when it has neither. The pro rata side letter is optional and separate.
Approve the SAFE before issuing it
YC says a company should obtain board approval before issuing a SAFE. Confirm the investor, amount, form, cap or discount, and any pro rata side letter in the approval record.
Complete signing and funding
YC's Send a SAFE tool supports US-incorporated companies, while transactions that need two company signers must use the manual form. A signed SAFE is not binding until the company receives the investment.
Model dilution and preserve the record
Model the investment amount, valuation cap or discount, and priced-round assumptions. Store the signed SAFE, approval, funding evidence, and side letter together so the cap table and data room stay reconcilable.
By John Cotter
Published January 26, 2026
SAFE Starter Kit: Everything Founders Need to Know
The Simple Agreement for Future Equity (SAFE) has become the standard for early-stage startup fundraising. This guide explains how SAFEs work, when to use them, and how to track them properly.
What is a SAFE?
A SAFE (Simple Agreement for Future Equity) is a financing contract where an investor gives you money now in exchange for the right to receive equity later, typically when you raise a priced round.
Created by: Y Combinator in 2013 Purpose: Simplify early-stage investment without the complexity of convertible notes
SAFE vs. Traditional Equity Round
| Aspect | SAFE | Priced Round |
|---|---|---|
| Legal cost | $0-500 | $15,000-50,000 |
| Time to close | Days | Weeks to months |
| Valuation set? | No (usually) | Yes |
| Board seat | No | Often |
| Complexity | Very simple | Complex |
Types of SAFEs
Pre-Money vs Post-Money SAFEs
Post-Money SAFE (Recommended)
- The valuation cap is the company's value AFTER the SAFE converts
- Easier to calculate how much the investor will own
- Current Y Combinator standard
Pre-Money SAFE (Legacy)
- The valuation cap is the company's value BEFORE the SAFE converts
- More complex ownership calculations
- Used less frequently today
Example:
- You raise $500K on a $5M post-money SAFE
- Investor will own exactly 10% ($500K ÷ $5M) at conversion
- Simple math, clear expectations
Valuation Cap vs Discount
Valuation Cap: Maximum valuation at which the SAFE converts
Discount: Percentage discount from the priced round valuation
Most Favored Nation (MFN): If you offer better terms to a later investor, earlier investors get those terms too
Common terms:
- Cap only: $5M-15M for pre-seed, $10M-25M for seed
- Discount only: 15-25% discount
- Cap + Discount: Investor gets the better of the two
How SAFE Conversion Works
Trigger Event
SAFEs convert to equity when one of these happens:
- Equity Financing — You raise a priced round (Series A/Seed)
- Liquidity Event — Company is acquired or goes public
- Dissolution — Company shuts down (investor gets money back first)
Conversion Example
Scenario:
- SAFE: $100K at $4M post-money cap
- Series A: $3M raised at $12M pre-money valuation
Calculation:
- Series A price per share: $12M ÷ 10M shares = $1.20/share
- SAFE conversion price: $4M ÷ 10M shares = $0.40/share (uses cap, not Series A price)
- SAFE investor shares: $100K ÷ $0.40 = 250,000 shares
- Regular Series A investor shares: $3M ÷ $1.20 = 2.5M shares
The SAFE investor gets 3x more shares per dollar because of the cap.
SAFE Terms to Understand
Pro Rata Rights
Allows investors to maintain their ownership percentage in future rounds by investing more.
Standard: Investors with SAFEs over $100K get pro rata rights
Side Letters
Additional agreements that modify SAFE terms, such as:
- Information rights (financial updates)
- Board observer rights
- Pro rata in future rounds
Pre-Money vs Post-Money SAFEs: Detailed Comparison
Pre-Money SAFE Ownership Calculation
With pre-money SAFEs, multiple SAFE investors dilute each other at conversion.
Example with two pre-money SAFEs:
- SAFE 1: $200K at $4M cap
- SAFE 2: $300K at $5M cap
- Series A: $2M at $10M pre-money
The ownership calculation becomes circular and complex.
Post-Money SAFE Ownership Calculation
With post-money SAFEs, each investor's ownership is clear and independent.
Same example with post-money SAFEs:
- SAFE 1 ($200K at $4M): Owns 5%
- SAFE 2 ($300K at $5M): Owns 6%
- Total SAFE ownership: 11%
Much simpler math!
SparkLaunch Feature: Our SAFE Tracker automatically calculates ownership percentages for both pre-money and post-money SAFEs, and shows the fully diluted cap table.
SAFE vs Convertible Note
Key Differences
| Feature | SAFE | Convertible Note |
|---|---|---|
| Maturity date | None | Yes (1-2 years) |
| Interest | None | Yes (2-8%) |
| Debt/Equity | Equity | Debt |
| Default risk | None | Yes |
| Complexity | Simple | More complex |
When to Use Each
Use a SAFE when:
- Raising from angels or VCs who accept SAFEs
- You want the simplest possible structure
- You want to avoid interest accrual
Use a Convertible Note when:
- Investor requires it (some family offices prefer notes)
- You're in a state with SAFE legal uncertainty
- Investor wants interest as additional return
How to Raise Money with SAFEs
Step 1: Determine Your Terms
Decide on:
- Amount: How much are you raising?
- Cap: What valuation cap makes sense?
- Type: Post-money (recommended) or pre-money?
- Pro rata: Will you offer it?
Step 2: Use Standard Documents
Download the standard YC SAFE documents:
- Post-Money SAFE (valuation cap)
- Post-Money SAFE (discount)
- Post-Money SAFE (MFN)
Do not try to create custom SAFE documents without a lawyer.
Step 3: Track Every SAFE
For each SAFE, record:
- Investor name and contact
- Investment amount
- Valuation cap
- Date signed
- Any side letters
SparkLaunch Feature: Track up to 1 SAFE on our free plan, 3 on Startup, and unlimited on Growth. The cap table automatically updates when you add SAFEs.
Step 4: Communicate with Investors
Keep SAFE investors updated on:
- Major milestones
- Hiring announcements
- Product launches
- When you start raising the next round
SAFE Tracking Best Practices
Maintain a SAFE Register
Create a table tracking:
| Investor | Date | Amount | Cap | Type | Converted? |
|---|---|---|---|---|---|
| Angel 1 | 1/15/26 | $50K | $5M | Post | No |
| VC Fund | 2/1/26 | $200K | $8M | Post | No |
Model Conversion Scenarios
Before raising a priced round, model how SAFEs will convert:
- What cap table will look like post-conversion?
- How much dilution will founders face?
- Is there room for new investor ownership targets?
SparkLaunch Feature: Our Dilution Scenarios tool lets you model different fundraising scenarios and see exactly how SAFEs will convert.
Common SAFE Mistakes
- Using pre-money when you mean post-money — Confirm with investors which type you're using
- Not tracking side letters — These modify SAFE terms and must be tracked
- Stacking too many SAFEs — Too much SAFE financing can kill your Series A
- Ignoring pro rata obligations — Budget for existing investor participation
- Not modeling conversion — Understand your cap table before your Series A
SAFE Resources
- Y Combinator SAFE documents: ycombinator.com/documents
- SparkLaunch SAFE Tracker: Built into your cap table
- SAFE Calculator: Coming soon to SparkLaunch
Checklist Before Signing a SAFE
- Confirm post-money vs pre-money
- Agree on valuation cap
- Discuss pro rata rights
- Review for any side letters
- Add to your cap table immediately
- Send investor a copy of signed SAFE
- Update your SAFE tracking spreadsheet
Guide Information
Difficulty: Intermediate
Estimated Time: 25 minutes
Category: Fundraising
Author: John Cotter
Published: January 26, 2026
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