SAFEs (simple agreements for future equity) and convertible notes let a startup raise money before setting a valuation. The investor pays now and receives shares later, usually at the next priced equity round, on better terms than the new investors.
Because nothing converts until that round, founders often lose track of how much of the company they have already promised. Several SAFEs raised over a year or two can add up to a large slice. This calculator shows the conversion before you sign the term sheet.
How to use it
How it’s calculated
The calculator follows the post-money SAFE convention. A SAFE with a cap converts into the amount divided by the cap. A SAFE with a discount converts at the round price reduced by the discount. When both apply, the investor receives whichever gives more ownership.
SAFE holders are then diluted by the new round alongside existing shareholders. The option pool is assumed to be created before the round, so it comes out of existing holders and SAFE holders rather than the new investors. Interest on convertible notes is not included; add accrued interest to the amount to model it.
Worked example
A founder raised $250,000 on a SAFE with a $6 million cap and a 20% discount, and later $500,000 on a SAFE with an $8 million cap. They now plan to raise $3 million at a $12 million pre-money valuation with a 10% option pool.
The first SAFE converts at its cap, giving about 4.2% before the round. The second converts at about 6.3%. After the round, SAFE holders own roughly 8.3%, the new investors 20%, the pool 10%, and founders about 61.7%.
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Frequently asked questions
What is the difference between a pre-money and post-money SAFE?
A post-money SAFE fixes the investor’s percentage at conversion, measured after all SAFEs convert but before the new round. A pre-money SAFE measures it before other SAFEs convert, which makes the final ownership harder to predict. Most SAFEs issued today are post-money.
Are SAFEs used in Canada?
Yes. Canadian startups commonly use SAFEs and convertible notes, often on templates adapted by Canadian law firms for local corporate and securities law. Have a lawyer review any template before you use it.
Is a convertible note the same as a SAFE?
No. A convertible note is debt: it carries interest and a maturity date. A SAFE is not debt and has neither. Both usually convert at the next priced round with a cap, discount or both.
Why do caps matter more than discounts?
When the priced round valuation is far above the cap, the cap gives the investor much more ownership than a typical 15% to 20% discount. The calculator shows which term applies to each SAFE.
What happens to a SAFE if the company is sold before a priced round?
Most SAFEs give the holder a choice between getting their money back and converting into common shares at the cap, whichever is worth more. Check the liquidity event clause in your agreement.
This tool gives estimates for planning and comparison. It is not legal, tax or investment advice. Confirm numbers with your lawyer, accountant or financial advisor before you sign anything. Inputs stay in your browser and are not stored.