Does the cap or the discount apply?

Whichever gives the investor the lower price. In a round priced well above the cap that is the cap, and the discount never comes into it.

What changed with post-money SAFEs?

The investor percentage became fixed rather than diluted by other SAFEs converting at the same time. It is clearer for the investor, and it moves the dilution from stacked notes onto the founders.

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SAFE Note Conversion Calculator

What a SAFE converts into at a priced round, and which of the cap and the discount actually governed. The cap is the term that matters in a good outcome: in a strong round the discount is irrelevant and the cap is doing all the work.

Also called: safe conversion calculator, y combinator safe calculator.

What the SAFE converts into

11.11%

11.11% for 5,000,000 on conversion, at an effective price of $4.00 a share. The cap governed: 4 a share against 6.4 after the discount. The round was priced well above the cap, so the discount never came into it, which is why the cap is the term worth negotiating. This is a post-money SAFE, so the percentage is fixed regardless of what else converts alongside. Dilution from other SAFEs falls on the founders rather than being shared with this investor.

Shares issued to the SAFE

1,250,000

Conversion price a share

$4.00

Price a share in the round

$8.00

Price a share at the cap

$4.00

Price a share after the discount

$6.40

Valuation the SAFE effectively converted at

$40,000,000.00

Gain against the round price

$5,000,000.00

Which term applied

The cap governed: 4 a share against 6.4 after the discount. The round was priced well above the cap, so the discount never came into it, which is why the cap is the term worth negotiating.

On the SAFE type

This is a post-money SAFE, so the percentage is fixed regardless of what else converts alongside. Dilution from other SAFEs falls on the founders rather than being shared with this investor.

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Cap against discount

Route	Price a share	Shares	Applies
Round price	$8	625,000	No, the SAFE converts below it
Discount of 20%	$6	781,250	No, the cap is lower
Valuation cap	$4	1,250,000	Yes

Method and background

How this is calculated

A SAFE is not a loan and carries no interest or maturity. It converts at the lower of two prices: the cap divided by the share count, and the round price less the discount. In a round priced far above the cap the cap price is much lower and governs entirely, which is why a founder should treat the cap as the real term and the discount as a footnote. The post-money variant, standard since 2018, fixes the investor percentage regardless of what other SAFEs convert alongside, so the dilution from stacked SAFEs falls on the founders rather than being shared. That change is worth understanding before signing several.

the investor converts at whichever of the cap price and the discounted round price is lower, which is the entire economics of a SAFE

C: Valuation cap
q: Shares outstanding
p_r: Round price
d: Discount

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a cap well below the round

SAFE investment: $5,000,000.00
Valuation cap: $40,000,000.00
Discount: 20%
Pre-money valuation of the priced round: $80,000,000.00
Shares outstanding before the round: 10,000,000
SAFE type: Post-money SAFE, the current standard

What the SAFE converts into11.11%

the cap price of 4 beats the discounted 6.4

Open this example

a round below the cap makes the discount govern

SAFE investment: $5,000,000.00
Valuation cap: $100,000,000.00
Discount: 20%
Pre-money valuation of the priced round: $80,000,000.00
Shares outstanding before the round: 10,000,000
SAFE type: Post-money SAFE, the current standard

What the SAFE converts into7.25%

boundary: the cap is above the round price so it does not bind

Open this example

Method and limits

What it assumes

Conversion at a priced round rather than at a sale or a maturity event.

What it deliberately does not model

Multiple SAFEs interact, and post-money SAFEs stack their dilution entirely onto the founders.
Pro rata rights, MFN clauses and side letters change the outcome without appearing in this arithmetic.

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Frequently asked questions

Does the cap or the discount apply?: Whichever gives the investor the lower price. In a round priced well above the cap that is the cap, and the discount never comes into it.
What changed with post-money SAFEs?: The investor percentage became fixed rather than diluted by other SAFEs converting at the same time. It is clearer for the investor, and it moves the dilution from stacked notes onto the founders.