SAFE Conversion at Series A: Cap Table Examples (The Math)
last updated: Feb 21, 2026
You own 100% of your startup until the moment you don't. When the Series A wire hits, the "Option Pool" is created, and your SAFE holders convert. Suddenly, you own a minority stake. Here is the math to prevent that shock.
TL;DR: The Cheat Code
SAFE conversion at Series A is the moment your "Simple Agreements" turn into actual shares, usually triggered by a priced equity round. This is where valuation caps, discounts, and the option pool collide to permanently set your ownership percentage.
How to read this: Use the models below to forecast your own "haircut."
- Benchmark: Founders typically retain 30–50% ownership post-Series A. Recent data from Carta's 2025 report shows the median founder ownership drops to 36.1% at Series A.
- Rule: The "Option Pool" (usually 10–15%) almost always comes out of your pre-money valuation, not the investor's.
- Warning: Stacked SAFEs (raising multiple times on different caps) can inadvertently trigger "super-dilution," where you sell more than 50% of the company before the Series A is even signed.
How to read this: Use the models below to forecast your own "haircut."
Glossary
- Valuation Cap: The maximum valuation your SAFE investors convert at. If you raise at $20M but the Cap is $10M, your early investors get shares at the $10M price (effectively buying 2x more equity than the Series A VC).
- Discount: A percentage off the Series A price (typically 20%). Used if the Series A valuation is lower than the Cap (or if the SAFE is uncapped).
- The Option Pool Shuffle: A negotiation tactic where VCs require you to create a large employee stock pool (10–15%) in the pre-money valuation. This dilutes the founders and SAFE holders specifically, effectively lowering your real valuation.
- Promised Options: Unissued options included in the capitalization count. In modern Post-Money SAFEs, these are included in the denominator, meaning the Option Pool Shuffle hurts the Founder more than the SAFE holder.
The asset: Cap Table Models
This table models the Founder Ownership % immediately after a Series A financing.
Assumptions:
Assumptions:
- Founder starts with: 100% Ownership (Paper value).
- Series A round: Raising $5M at $20M Pre-Money ($25M Post-Money).
- Option pool: 10% Post-Money Pool ($2.5M value) created in the Pre-Money.
- Dilution event: The Series A Investor takes 20% ($5M/$25M). The Pool takes 10%. The "Existing Shareholders" (Founders + SAFEs) are left with 70%.
Note: Real-world results are often lower (median ~36%) because founders rarely raise just one clean SAFE round. They often have "stacked" rounds (Pre-Seed + Seed) which compounds the dilution.
Sample math for Scenario 1 ($10M Cap)
Sample math for Scenario 2 (Uncapped)
Sample math for Scenario 1 ($10M Cap)
- SAFE conversion: The SAFE ($2M) has a $10M Post-Money Cap. This locks the SAFE ownership at 20% ($2M / $10M) of the company capitalization before the Series A money enters.
- Founder stake: Since SAFE owns 20%, Founders own 80% of the "Pre-Money" pie.
- Series A slicing: The Series A Investor puts in $5M on $25M Post-Money (20% ownership). The Term Sheet demands a 10% Option Pool ($2.5M value) be available post-closing.
- The crush: The New Money (20%) and Pool (10%) take up 30% of the Post-Money table.
- The remainder: The remaining 70% is shared by the Existing Shareholders (Founders + SAFE).
- Final calc: Founders get 70% of their original 80% slice. 0.70 * 0.80 = 56%
Sample math for Scenario 2 (Uncapped)
- SAFE converts at a 20% discount to the Series A price.
- The SAFE puts in $2M but buys shares as if it put in $2.5M ($2M / 0.80).
- Effectively, the SAFE grabs ~10% of the Post-Money company ($2.5M / $25M).
- Series A grabs 20%. Pool grabs 10%. Total dilution = 40%.
- Founders retain the rest: 60%.
Benchmarks
Founders often panic when they see their ownership drop below 50%. Is this normal?
If your models show you dipping below 30% at Series A, you likely raised too much on too low a cap (the "Death Spiral") or have an aggressive option pool requirement. Validate your specific numbers using a Term Sheet Calculator for Startups before signing.
- Seed Stage: Founding teams typically own 50–60%.
- Series A: Founding teams typically own 30–50%.
- IPO: By the time of exit, it is common for founders to own 15–25%.
If your models show you dipping below 30% at Series A, you likely raised too much on too low a cap (the "Death Spiral") or have an aggressive option pool requirement. Validate your specific numbers using a Term Sheet Calculator for Startups before signing.
Pre-money vs Post-money SAFEs
The math changes drastically depending on which vintage of SAFE you used. This is the single most common confusion point.
- Pre-Money SAFE (Old School): The investor's ownership is not fixed. It fluctuates based on the Series A valuation. You (the founder) and the SAFE holder share the dilution from the Option Pool.
- Post-Money SAFE (Standard since 2018): The investor locks in a fixed percentage (e.g., 20%) relative to the company capitalization before the Series A. According to Y Combinator's standards, these are clearer but slightly more dilutive to founders because the SAFE holder is protected from the pre-Series A option pool dilution—you take that hit alone.
Risks
The most dangerous scenario is Stacked SAFEs. This happens when you raise a "Pre-Seed" at a $6M Cap, run out of money, raise a "Bridge" at an $8M Cap, and then a "Seed" at a $12M Cap.
When the priced round finally hits, all those SAFEs convert simultaneously. You aren't just diluting for the new money; you are clearing a backlog of debt-equity. We have seen founders sell 51% of their company in a single day because they treated SAFEs like free money rather than delayed equity.
When the priced round finally hits, all those SAFEs convert simultaneously. You aren't just diluting for the new money; you are clearing a backlog of debt-equity. We have seen founders sell 51% of their company in a single day because they treated SAFEs like free money rather than delayed equity.
Conclusion
Mastering SAFE conversion at Series A is a necessary defensive step, but it is not the whole picture. You can have the cleanest cap table in the world, with perfect 20% dilution management, but if your core variables (Offer, Strength, Market Timing) are weak, your probability of hitting $10k MRR remains near 0%.
The math above protects your equity, but it doesn't build it. Founders often obsess over "saving" 2% dilution on a term sheet while ignoring that their revenue has flatlined. The "Option Pool Shuffle" is painful, but the only thing that truly fixes dilution is leverage — and leverage comes from revenue. If you are at $0 MRR, worry less about the Series A shuffle and more about getting your first 10 customers. A high-growth company with a messy cap table is fixable; a perfectly structured company with no revenue is dead.
The math above protects your equity, but it doesn't build it. Founders often obsess over "saving" 2% dilution on a term sheet while ignoring that their revenue has flatlined. The "Option Pool Shuffle" is painful, but the only thing that truly fixes dilution is leverage — and leverage comes from revenue. If you are at $0 MRR, worry less about the Series A shuffle and more about getting your first 10 customers. A high-growth company with a messy cap table is fixable; a perfectly structured company with no revenue is dead.
FAQ
- You:Does the Option Pool come out of the pre-money or post-money?Guide:In 95% of Series A term sheets, the VC will insist it comes out of the pre-money. This means the dilution falls entirely on the existing shareholders (you and your SAFE holders), not the new investor. See Cooley's guide on the Shuffle for a deeper legal breakdown.
- You:What happens to pro-rata rights during conversion?Guide:Major SAFE investors often have "pro-rata rights" (the right to maintain their percentage). If they exercise this in the Series A, they will buy additional shares on top of their converted SAFE shares to keep their 20% stake, which further dilutes the founders.
- You:How do "Post-Money" SAFEs differ from "Pre-Money" SAFEs in this math?Guide:Pre-Money SAFEs are unpredictable; their ownership % depends on the Series A valuation. Post-Money SAFEs (standard since 2018) lock in a specific ownership percentage before the round. While Post-Money SAFEs are clearer, they are also more "anti-dilutive" for the investor, often shifting more dilution onto the founder during the option pool creation.
- You:What about Liquidation Preferences?Guide:SAFE holders typically convert into "Preferred Stock," meaning they get paid back first in a sale. You must model liquidation preference examples to understand your exit scenarios.
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