Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A SAFE's cap and discount interact with the specific capitalization table definition used at conversion, so the identical stated cap can produce different actual ownership percentages depending on whether option pool expansion and other securities are included in or excluded from that capitalization definition at the moment of conversion.
Before you rely on it
What to check
Confirm the exact capitalization definition being used for the conversion calculation, since what's included or excluded from that definition directly changes the resulting ownership percentage.
The common error
Where people go wrong with SAFE conversion calculator
Assuming a SAFE's cap alone determines ownership percentage without checking the specific capitalization definition applied at conversion. Different definitions of the cap table at that moment can produce different actual ownership outcomes from the identical stated cap.
Sensitivity evidence
How SAFE investment changes the estimated SAFE ownership
| SAFE investment | Estimated SAFE ownership | Effective conversion valuation |
|---|---|---|
| $400,000 | 4.8% | $8,000,000 |
| $450,000 | 5.3% | $8,000,000 |
| $500,000worked example | 5.9% | $8,000,000 |
| $550,000 | 6.4% | $8,000,000 |
| $600,000 | 7.0% | $8,000,000 |
Every input, tested
Which input moves the estimated SAFE ownership most
| Input | Tested from | To | Estimated SAFE ownership at each end | Swing |
|---|---|---|---|---|
| SAFE investment | $450,000 | $550,000 | 5.3% to 6.4% | 1.1% (19%) |
| Valuation cap | $7,200,000 | $8,800,000 | 6.5% to 5.4% | 1.1% (19%) |
| Priced-round pre-money valuation | $10,800,000 | $13,200,000 | 5.9% to 5.9% | none |
| Conversion discount | 18.0% | 22.0% | 5.9% to 5.9% | none |
Two variables at once
Estimated SAFE ownership by SAFE investment and valuation cap
| SAFE investment \ Valuation cap | $6,400,000 | $8,000,000 | $9,600,000 |
|---|---|---|---|
| $400,000 | 5.9% | 4.8% | 4.0% |
| $450,000 | 6.6% | 5.3% | 4.5% |
| $500,000 | 7.2% | 5.9% | 5.0% |
| $550,000 | 7.9% | 6.4% | 5.4% |
| $600,000 | 8.6% | 7.0% | 5.9% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| SAFE investment | $500,000 |
| Valuation cap | $8,000,000 |
| Priced-round pre-money valuation | $12,000,000 |
| Conversion discount | 20.0% |
| Estimated SAFE ownership | 5.9% |
| Effective conversion valuation | $8,000,000 |
Where the inputs come from
SAFE investment is the amount the investor put in, the valuation cap is the maximum valuation at which the SAFE converts, the priced-round pre-money valuation is what the next equity round is valued at, and the conversion discount is a percentage off the round price. A SAFE converts at the lower of the cap price and the discounted round price. Read your SAFE: post-money SAFEs, the standard since 2018, calculate ownership on the company's post-money capitalization including all SAFEs.
Using the estimated SAFE ownership in a real decision
A post-money SAFE document may compute the share slightly differently, so check yours. Use it to see how a cap and a discount affect ownership when the next round is priced, and to model founder dilution from all outstanding SAFEs before the round.
When the result stops applying
This simplified model does not include the option pool, other SAFEs converting at the same time, pro rata rights or the round's new money, all of which change the final ownership. Pre-money and post-money SAFE conventions differ, and the version in your document matters. The calculation assumes conversion at a priced equity round, not at a liquidity event.
What to compare it with
See the round on the pre-money and post-money calculator, and the effect on you on the startup dilution page. The convertible note calculator handles the interest-bearing version, and the option pool dilution page covers employee equity. Confirm conversion with the cap table.
People also ask
Frequently asked questions
What is a SAFE?
A Simple Agreement for Future Equity, an investment contract that converts into shares at a later priced round, at a price set by a valuation cap, a discount or both.
What does a valuation cap do?
It sets the maximum valuation at which the SAFE converts, so early investors get shares at a lower price than later investors if the company's value rises.
What is the difference between a cap and a discount?
A cap limits the conversion valuation, and a discount reduces the price relative to the next round. The SAFE converts using whichever gives the investor the lower price.