Financial Planning
SAFE Conversion: How to Model Multiple SAFEs
Inventory every SAFE, calculate a constrained two-cap example and reconcile ownership before and after a priced round.
What you will learn
- Build a complete outstanding-SAFE register
- Reconcile two cap-based conversion estimates to shares
- Separate conversion ownership from subsequent financing dilution
Model multiple SAFEs by inventorying every executed instrument, identifying its conversion method, and building a combined share bridge before new financing. Do not model the newest SAFE in isolation. Separate the estimated pre-priced-round result from later new-money and pool dilution.
You need counsel-reviewed terms and a reconciled cap table. The example uses two post-money cap-only SAFEs assumed to convert at their caps, no options or warrants, no discounts, no MFN, and no side-letter purchases. It is a narrow teaching scenario, not a universal conversion engine.
Build the instrument register first
Assign one row to each executed agreement. Record purchase amount, funded status, exact cap basis, discounts, amendments, side rights and document locators. Keep signed and funded separate. A missing earlier instrument can make a polished model wrong.
The YC SAFE User Guide illustrates cap-based post-money ownership estimates and explains that later equity financing dilutes those estimates. Its examples do not remove the need to read the actual instruments.
Calculate a two-cap illustration
Fictional inputs: SAFE A invests $300,000 at a $6 million post-money cap. SAFE B invests $400,000 at an $8 million post-money cap. Existing included common shares total 9 million.
SAFE A estimated pre-priced-round fraction = 300,000 ÷ 6,000,000 = 5%
SAFE B estimated fraction = 400,000 ÷ 8,000,000 = 5%
Existing holders = 90%
Illustrative as-converted total = 9,000,000 ÷ 90% = 10,000,000 shares
SAFE A shares = 500,000; SAFE B shares = 500,000Check the implied cap conversion prices: A uses $300,000 ÷ 500,000 = $0.60 per share; B uses $400,000 ÷ 500,000 = $0.80. Equal ownership does not require equal purchase amounts when the cap inputs differ.
Now assume a priced round at a $20 million pre-money value including that 10 million-share as-converted capitalization. Its $2 issue price is above both cap conversion prices. A $5 million investment issues 2.5 million new shares. No pool change is assumed.
Completed combined conversion and financing bridge
| Holder | Shares before new money | After new money | Post-round ownership |
|---|---|---|---|
| Existing common | 9,000,000 | 9,000,000 | 72% |
| SAFE A | 500,000 | 500,000 | 4% |
| SAFE B | 500,000 | 500,000 | 4% |
| New investor | 0 | 2,500,000 | 20% |
| Total | 10,000,000 | 12,500,000 | 100% |
Test the boundaries rather than stretching the shortcut
If the priced-round conversion method produces a lower price, the cap-based estimate may not be the operative result. A discount, legacy pre-money SAFE, MFN change, promised options, or new pool can also change the calculation. Stop and expand the model with counsel. Do not simply keep the 5% estimates because the sheet already balances.
Pro rata purchases are new investment, not free extra SAFE shares. Record them as a separate financing allocation. Use the pro rata exercise to distinguish fixed-total-round and outside-money-plus-participation assumptions.
Copy the conversion model brief
Cap table version / modeling date: [ ]
Instrument register: [ID, holder, executed form, funded amount]
Cap basis / discount / MFN / amendment per instrument: [ ]
Side letters and participation rights: [ ]
Capitalization inclusions confirmed by counsel: [ ]
Applicable conversion path per instrument: [ ]
As-converted shares and pre-new-money percentages: [ ]
Priced-round valuation / issue price / new cash: [ ]
Pool changes and other issuances: [ ]
Post-round holder shares and percentages: [ ]
Reconciliation / rounding / open questions: [ ]Audit the result
Red flags: only the most recent agreement is included; a pre-money cap is treated as post-money; cap and discount are combined without support; the option reserve is missing; signatures are described as cash; share classes with different rights are called interchangeable.
- Every instrument ties to executed documents and cash records.
- Each conversion has an explicit applicable formula.
- Investment divided by conversion price reconciles to shares.
- Both the pre-new-money and final totals sum correctly.
- Counsel and finance review uncertainties before the model is relied on.
Use this worksheet alongside SAFE cap definitions, not as a replacement for them.
Informational disclaimer
We are not lawyers. This article is for general education only and is not legal, tax, accounting or investment advice. Check with your attorney or accountant before acting on it.