Swipe File: Post-Money SAFE Template (YC Standard Annotated)
last updated: Feb 7, 2026
Y Combinator's standard Post-Money SAFE is not a neutral document. It is an investor protection tool disguised as a simple agreement. You must understand specifically where the math turns against you before you sign away fixed percentages of your company. This guide dissects the standard template and highlights the exact clauses that dilute your equity.
TL;DR
A Post-Money SAFE Template is a fundraising instrument that locks in an investor's ownership percentage immediately. This forces the founder to absorb 100% of the dilution from any subsequent SAFEs raised before the priced round.
How to read this: Use the annotated template below to spot the traps in your own documents.
- Benchmark: Founders typically sell 10–20% equity total in a pre-seed round.
- Rule: Never stack multiple Post-Money SAFEs without calculating the cumulative dilution on your stake.
- Warning: The Anti-Dilution mechanic means early investors do not get diluted by later investors. You do.
How to read this: Use the annotated template below to spot the traps in your own documents.
Glossary
- Post-Money Valuation Cap: The maximum valuation at which the investor's money converts to equity. In this template, it effectively sets a fixed ownership price (e.g., $1M on $10M Cap = 10% ownership, guaranteed).
- Liquidity Event: A sale of the company (M&A) or an IPO. This clause dictates who gets paid first. Usually, the investor gets their money back (or a multiple) before you see a dime, similar to a standard liquidation preference.
- Company Capitalization: The total number of shares used as the denominator in math equations. In Post-Money SAFEs, this definition is tweaked to lock in investor ownership, often excluding the unissued option pool increase to protect them further.
- Pro-Rata Rights: The right for an investor to maintain their percentage ownership in future rounds. While often a side letter, if included, it restricts your ability to bring in new capital without making room for old money.
The Asset
Below are the two most critical clauses from the standard YC Post-Money SAFE. We have added annotation blocks to explain exactly how these sentences act as Red Pill mechanics against the founder.
<!-- CLAUSE 1: THE VALUATION CAP (THE MATH TRAP) -->
"Post-Money Valuation Cap": $ [AMOUNT]
<!--
FOUNDER TRAP:
This single line determines your fate.
In a Pre-Money SAFE, if you raised more money later, early investors got diluted alongside you.
In this Post-Money SAFE, this number fixes the investor's ownership percentage PERMANENTLY until the priced round.
Math: Investment Amount / Post-Money Valuation Cap = Ownership %.
Example: $500k / $5M Cap = 10%.
If you raise another $500k from a second investor effectively at the same cap:
- Investor A stays at 10%.
- Investor B gets 10%.
- YOU drop from 90% to 80%.
You eat 100% of the dilution.
-->
<!-- CLAUSE 2: EQUITY FINANCING (CONVERSION MECHANICS) -->
(a) Equity Financing. If there is an Equity Financing before the termination of this Safe,
on the initial closing of such Equity Financing, this Safe will automatically convert into
the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Conversion Price.
In connection with the issuance of Safe Preferred Stock by the Company to the Investor pursuant to this Section 1(a):
(i) The Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing...
<!--
TRANSLATION:
When you raise a "real" priced round (Series A), this SAFE turns into actual shares.
The "Safe Preferred Stock" usually has better liquidation preferences than your Common Stock.
-->
<!-- CLAUSE 3: LIQUIDITY EVENT (WHO GETS PAID FIRST) -->
(b) Liquidity Event. If there is a Liquidity Event before the termination of this Safe,
this Safe will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below)
to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with,
the consummation of such Liquidity Event, equal to the greater of:
(i) the Purchase Amount (the "Cash-Out Amount") or
(ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the "Conversion Amount").
<!--
FOUNDER TRAP:
This is the "1X Non-Participating Liquidation Preference" in disguise.
If you sell the company for a low amount (fire sale):
- Scenario A: You sell for LESS than the valuation cap. The investor takes their money back first (Purchase Amount). You get what's left.
- Scenario B: You sell for MORE. They convert to shares and take their % of the exit.
"Greater of" means they win in a downside scenario, and they win in an upside scenario.
You only win if there is money left over after they are made whole.
-->
<!-- CLAUSE 4: DEFINITION OF COMPANY CAPITALIZATION (THE INVISIBLE DILUTION) -->
"Company Capitalization" means the sum, as of immediately prior to the Equity Financing, of:
(1) all shares of Capital Stock (on an as-converted basis) issued and outstanding,
assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities,
but excluding (A) this Safe, (B) all other Safes, and (C) convertible promissory notes; and
(2) all shares of Common Stock reserved and available for future grant under any equity incentive or similar plan...
<!--
FOUNDER TRAP:
This definition is tricky. It EXCLUDES the SAFE itself from the denominator when calculating "Liquidity Price" in some versions, but for the main conversion, the Post-Money math relies on the fixed CAP.
The danger here is often what is INCLUDED: "all shares... reserved and available for future grant."
This means the investor's price is calculated assuming you have ALREADY filled your option pool.
If you have to increase the pool later, that dilution hits YOU, not them (because their price is already locked based on the Cap).
-->
<!-- CLAUSE 1: THE VALUATION CAP (THE MATH TRAP) -->
"Post-Money Valuation Cap": $ [AMOUNT]
<!--
FOUNDER TRAP:
This single line determines your fate.
In a Pre-Money SAFE, if you raised more money later, early investors got diluted alongside you.
In this Post-Money SAFE, this number fixes the investor's ownership percentage PERMANENTLY until the priced round.
Math: Investment Amount / Post-Money Valuation Cap = Ownership %.
Example: $500k / $5M Cap = 10%.
If you raise another $500k from a second investor effectively at the same cap:
- Investor A stays at 10%.
- Investor B gets 10%.
- YOU drop from 90% to 80%.
You eat 100% of the dilution.
-->
<!-- CLAUSE 2: EQUITY FINANCING (CONVERSION MECHANICS) -->
(a) Equity Financing. If there is an Equity Financing before the termination of this Safe,
on the initial closing of such Equity Financing, this Safe will automatically convert into
the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Conversion Price.
In connection with the issuance of Safe Preferred Stock by the Company to the Investor pursuant to this Section 1(a):
(i) The Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing...
<!--
TRANSLATION:
When you raise a "real" priced round (Series A), this SAFE turns into actual shares.
The "Safe Preferred Stock" usually has better liquidation preferences than your Common Stock.
-->
<!-- CLAUSE 3: LIQUIDITY EVENT (WHO GETS PAID FIRST) -->
(b) Liquidity Event. If there is a Liquidity Event before the termination of this Safe,
this Safe will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below)
to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with,
the consummation of such Liquidity Event, equal to the greater of:
(i) the Purchase Amount (the "Cash-Out Amount") or
(ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the "Conversion Amount").
<!--
FOUNDER TRAP:
This is the "1X Non-Participating Liquidation Preference" in disguise.
If you sell the company for a low amount (fire sale):
- Scenario A: You sell for LESS than the valuation cap. The investor takes their money back first (Purchase Amount). You get what's left.
- Scenario B: You sell for MORE. They convert to shares and take their % of the exit.
"Greater of" means they win in a downside scenario, and they win in an upside scenario.
You only win if there is money left over after they are made whole.
-->
<!-- CLAUSE 4: DEFINITION OF COMPANY CAPITALIZATION (THE INVISIBLE DILUTION) -->
"Company Capitalization" means the sum, as of immediately prior to the Equity Financing, of:
(1) all shares of Capital Stock (on an as-converted basis) issued and outstanding,
assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities,
but excluding (A) this Safe, (B) all other Safes, and (C) convertible promissory notes; and
(2) all shares of Common Stock reserved and available for future grant under any equity incentive or similar plan...
<!--
FOUNDER TRAP:
This definition is tricky. It EXCLUDES the SAFE itself from the denominator when calculating "Liquidity Price" in some versions, but for the main conversion, the Post-Money math relies on the fixed CAP.
The danger here is often what is INCLUDED: "all shares... reserved and available for future grant."
This means the investor's price is calculated assuming you have ALREADY filled your option pool.
If you have to increase the pool later, that dilution hits YOU, not them (because their price is already locked based on the Cap).
-->
Benchmarks
Before signing, you must verify your numbers against market standards to avoid over-dilution. You can use our SAFE Pre-Seed Calculator to model these scenarios.
Sample Math: The Cost of Stacking
If you raise $500,000 on a $5M Post-Money Cap:
Sample Math: The Cost of Stacking
If you raise $500,000 on a $5M Post-Money Cap:
- Investor Ownership: 10% ($500k / $5M).
- Founder Ownership: 90% (assuming no other investors).
- Investor 1: Remains at 10% (protected).
- Investor 2: Takes 5% ($500k / $10M).
- Founder Ownership: Drops to 85%.
Post-Money vs Pre-Money SAFE
Understanding the difference between Term Sheet vs SAFE is crucial, but knowing the difference between the two SAFE types is what saves your equity.
Pre-Money SAFE:
The valuation cap refers to the company value before the investment. When new money comes in, both the founder and the early investor get diluted together. This is generally more founder-friendly but requires more complex math (recursion) to calculate exact ownership.
Post-Money SAFE
The valuation cap refers to the value after the investment. The investor locks in a fixed percentage immediately. This is simpler but harsher on the founder, as explained in detailed post-money SAFE dilution mechanics.
If you have the leverage, consider using a SAFE Template Pre-Money SaaS, though most professional investors will insist on the Post-Money standard today.
Pre-Money SAFE:
The valuation cap refers to the company value before the investment. When new money comes in, both the founder and the early investor get diluted together. This is generally more founder-friendly but requires more complex math (recursion) to calculate exact ownership.
Post-Money SAFE
The valuation cap refers to the value after the investment. The investor locks in a fixed percentage immediately. This is simpler but harsher on the founder, as explained in detailed post-money SAFE dilution mechanics.
If you have the leverage, consider using a SAFE Template Pre-Money SaaS, though most professional investors will insist on the Post-Money standard today.
Risks
The Death Spiral
The biggest risk is stacking multiple Post-Money SAFEs at different caps. If you raise small amounts frequently (e.g., $100k checks every 3 months) at slowly increasing caps, you are selling fixed percentage blocks of your company. Founders often wake up at Series A realizing they only own 40% of the business because they treated SAFEs like debt rather than equity sales.
The Option Pool Shuffle
The "Company Capitalization" clause often forces you to include an available option pool in the share count. If your pool is empty, investors may force you to increase it before the SAFE converts. Because the Post-Money SAFE fixes their price, this pool increase dilutes only you, effectively lowering your pre-money valuation.
The biggest risk is stacking multiple Post-Money SAFEs at different caps. If you raise small amounts frequently (e.g., $100k checks every 3 months) at slowly increasing caps, you are selling fixed percentage blocks of your company. Founders often wake up at Series A realizing they only own 40% of the business because they treated SAFEs like debt rather than equity sales.
The Option Pool Shuffle
The "Company Capitalization" clause often forces you to include an available option pool in the share count. If your pool is empty, investors may force you to increase it before the SAFE converts. Because the Post-Money SAFE fixes their price, this pool increase dilutes only you, effectively lowering your pre-money valuation.
Will a perfect SAFE get you to $10k MRR?
Mastering the Post-Money SAFE is a necessary step to avoid cap table suicide, but it is not the whole picture. You can negotiate the most founder-friendly terms in history, but if your other variables (Offer, Strength, and Market Timing) are weak, your probability of hitting $10k MRR remains near 0%.
The bridge logic here is brutal: YC designed this document to standardize their portfolio management, not to optimize your specific outcome. Use this swipe file to ensure you don't lose 40% of your company for $200k, but remember that investor protection clauses do not generate revenue. Only product-market fit does.
The bridge logic here is brutal: YC designed this document to standardize their portfolio management, not to optimize your specific outcome. Use this swipe file to ensure you don't lose 40% of your company for $200k, but remember that investor protection clauses do not generate revenue. Only product-market fit does.
FAQ
- You:What is the main difference between Pre-Money and Post-Money SAFEs?Guide:In a Pre-Money SAFE, the investor's ownership is determined after the round, meaning they share dilution with the founder. In a Post-Money SAFE, the investor's ownership is fixed immediately (e.g., $1M on $10M = 10%), forcing the founder to absorb all dilution from subsequent notes.
- You:Why does Y Combinator push the Post-Money SAFE?Guide:It simplifies math for investors and lawyers. It allows "High Resolution Fundraising" where you don't need to coordinate a single closing date. However, this convenience comes at the cost of Anti-Dilution protection for the investor, which is paid for by your equity.
- You:Can I modify the "Standard" YC template?Guide:Yes, but be careful. Investors treat the YC SAFE as a standard to avoid legal fees. If you change material terms (like removing the pro-rata side letter or altering the liquidity preference), you flag yourself as difficult or unsophisticated unless you have high leverage.
- You:What is the dangerous "Death Spiral" with Post-Money SAFEs?Guide:Stacking them. If you raise $500k at $5M (10%), then $500k at $6M (8.3%), then $500k at $8M (6.25%), you have sold nearly 25% of your company before the Series A. In a Pre-Money world, those investors would have diluted each other. Here, they stack purely on top of you.
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