Learn the critical differences between post-money and pre-money SAFEs. Understand which protects founders better, how dilution calculations work, and why 94% of startups now use post-money SAFEs.
A Post-Money SAFE (Simple Agreement for Future Equity) is a financing instrument where the valuation cap is calculated after (post) including the SAFE investment amount. This means investors know exactly what percentage of your company they will own when the SAFE converts, regardless of how many additional SAFEs you raise before your next priced round.
Y Combinator introduced the post-money SAFE format in October 2018 to address the dilution uncertainty that plagued the original pre-money structure. According to Carta data, 87% of all SAFEs signed in 2024 are post-money SAFEs, making this the dominant industry standard for early-stage fundraising.
The critical innovation of post-money SAFEs is predictability: if you raise $500K on a $10M post-money valuation cap, SAFE investors are guaranteed exactly 5% of your company ($500K ÷ $10M = 5%). This ownership percentage remains fixed even if you raise three more SAFEs before Series A. That certainty is why post-money SAFEs have achieved near-universal adoption among angels, micro VCs, and institutional seed investors.
Here's the statistic that ended the pre-money vs post-money debate: 87% of all SAFEs were post-money SAFEs in 2024, up from just 43% at the start of 2020 (Carta quarterly data). This represents a complete market shift in just four years. First-time founders no longer need to debate which format to use — post-money is the standard, and any investor pushing for pre-money in 2025 is either uninformed or trying to gain an unfair advantage.
A Pre-Money SAFE is the original SAFE format (introduced by Y Combinator in 2013) where the valuation cap is calculated before (pre) including the SAFE investment and any subsequent SAFEs. This creates uncertainty about exactly how much ownership SAFE investors will receive, because their final percentage depends on how much additional SAFE capital you raise before your priced equity round.
Under a pre-money SAFE, if you raise $500K on a $10M valuation cap, investors don't automatically get 5% of your company. Instead, their ownership gets diluted by any subsequent SAFEs you raise, meaning they might end up with 4.2% or 3.8% depending on your total SAFE stack. This uncertainty is why Y Combinator deprecated pre-money SAFEs in 2018 and why only 14% of SAFEs in 2024 still use the pre-money format (Carta data).
Pre-money SAFEs remain in limited use, primarily in three scenarios: (1) highly founder-friendly deals where sophisticated angels intentionally accept more dilution risk, (2) international markets where post-money adoption lags the US, or (3) situations where both founders and investors are unfamiliar with the 2018 changes and are using outdated templates.
The fundamental difference between post-money and pre-money SAFEs comes down to one question: Who bears the dilution burden when you raise multiple SAFEs?
Post-Money SAFEs: Founders bear 100% of the dilution from multiple SAFEs. Each SAFE guarantees investors a fixed ownership percentage, and if you raise three SAFEs totaling 15% ownership, founders are diluted by the full 15%. Earlier SAFE investors are protected — their ownership percentage doesn't change when you raise subsequent SAFEs.
Pre-Money SAFEs: Founders and earlier SAFE investors share the dilution burden. When you raise a second pre-money SAFE, it dilutes not just founders but also the first SAFE investors. This "dilution sharing" seems founder-friendly at first glance, but it creates massive complexity and uncertainty that actually hurts founders in practice.
The paradox: While pre-money SAFEs mathematically dilute founders less than post-money SAFEs when raising multiple rounds, this comes at the cost of predictability. As one Silicon Valley law firm explains: "The dilution burden of multiple post-money SAFE financings solely impacts founders upon conversion, unlike pre-money SAFEs where dilution is shared with earlier investors. However, the transparency of post-money SAFEs typically outweighs the mathematical dilution advantage of pre-money SAFEs."
Alex is building a B2B fintech platform and needs to raise $1M in pre-seed capital. She raises two separate SAFE rounds from different investor groups: First, $500K from angel investors at a $6M valuation cap in January. Then, $500K from a micro VC at a $9M valuation cap in July. One year later, she raises a $6M Series A at a $20M pre-money valuation with a 15% option pool.
With post-money SAFEs, the math is straightforward and predictable:
When Series A closes, here's Alex's final cap table:
Alex knew from day one that raising those two SAFEs would cost her 13.89% ownership. No surprises.
With pre-money SAFEs, the calculation is complex and the outcome uncertain until Series A:
At Series A conversion with pre-money SAFEs:
The difference: Alex owns 1.79 percentage points more with pre-money SAFEs (49.82% vs 48.03%). On a $100M exit, that's $1.79M. But here's the catch — she had no idea what her ownership would be until Series A closed. She couldn't model scenarios, negotiate confidently, or plan her cap table. The mathematical gain came at the cost of total uncertainty.
Y Combinator's decision to abandon pre-money SAFEs in October 2018 wasn't arbitrary — it addressed a real problem that emerged as SAFE usage evolved. "The original pre-money SAFE was standardized on a pre-money basis, which made it difficult for founders to calculate precisely how they were being diluted when raising money," Y Combinator explained in their announcement.
The core issues that drove the change:
With pre-money SAFEs, calculating dilution required solving a recursive equation: your ownership depended on how much you raised on other pre-money SAFEs, which depended on assumptions about your future Series A option pool size, which you wouldn't negotiate for another 12-18 months. These unknowable elements meant founders couldn't accurately plan their fundraise or model different scenarios.
Between 2013 and 2018, the early-stage fundraising environment transformed. Startups began raising much larger amounts as first "seed" rounds using SAFEs — often $1M to $3M across multiple SAFE tranches. SAFEs evolved from quick $100K-$250K "bridges" into standalone seed financings, but the pre-money math was designed for the bridge use case.
As Y Combinator noted, the post-money SAFE has "a huge advantage for both founders and investors — the ability to calculate immediately and precisely how much ownership of the company has been sold." This transparency benefits everyone: founders can model their cap table, investors can calculate their exact ownership, and lawyers can draft clearer term sheets.
The market validated Y Combinator's decision: Post-money SAFE adoption went from 0% in 2017 to 87% in 2024, one of the fastest format shifts in startup finance history.
The single biggest advantage of post-money SAFEs is that you know exactly how much ownership you're selling the moment you sign. If an investor offers you $250K on a $5M post-money cap, you immediately know you're selling 5% ($250K ÷ $5M). No waiting, no complex calculations, no surprises at Series A. This clarity lets you make informed decisions during negotiations, not guesses.
With post-money SAFEs, you can build a precise cap table model showing your ownership after Series A under different valuation scenarios. Want to know how much you'll own if you raise Series A at $15M vs $25M? With post-money SAFEs, you can calculate it in 5 minutes. With pre-money SAFEs, you need complex spreadsheets accounting for SAFE stacking effects across multiple rounds. According to AngelList data, 73% of founders using post-money SAFEs model their dilution before signing, compared to just 31% using pre-money SAFEs.
When you tell a post-money SAFE investor "you'll own 5% of the company," that's a binding promise regardless of what happens before Series A. If you raise two more SAFEs or none at all, that investor still gets their 5%. This makes investor updates simple: "You invested $250K for 5%, and you'll still own 5% when we convert." Pre-money SAFEs require hedged language: "You invested $250K, and you'll own somewhere between 4% and 6% depending on additional capital we raise." Certainty builds investor confidence.
When raising your second or third SAFE before Series A, post-money SAFEs make negotiations cleaner. New investors can calculate exactly what they're buying without needing to audit all your previous SAFEs. With pre-money SAFEs, every new investor must analyze your entire SAFE stack to understand dilution effects. This added complexity slows fundraising and creates opportunities for deal-killing confusion.
Perhaps the most practical advantage: 87% of SAFEs in 2024 are post-money format, which means investors, lawyers, and accelerators are all optimized for post-money terms. Standard templates work out of the box. Lawyers can draft documents quickly. Investors don't push back on structure because it's what they see in 9 out of 10 deals. Pre-money SAFEs create friction — investors wonder why you're using an outdated format, and lawyers need to explain the differences.
The "stacking problem" refers to the unpredictable dilution effects when founders raise multiple pre-money SAFEs before their priced equity round. Each new pre-money SAFE dilutes all previous SAFEs and the founders, creating a complex web of interdependent ownership percentages that can only be calculated at conversion. The problem is mathematical certainty traded for planning chaos.
Here's why stacking is dangerous: 47% of seed-stage companies raise capital across 2-3 different SAFEs before Series A (Carta, 2024). If you're using pre-money SAFEs and raise three tranches with different caps, you won't know your actual ownership until 12-18 months after your first SAFE, when Series A finally triggers conversion.
Pre-money SAFE investors face an uncomfortable reality: they don't know what they own. An investor who writes a $100K check on a $4M pre-money cap might expect 2.5% ownership, but if the founder raises two more pre-money SAFEs totaling $600K, that investor ends up with closer to 1.8%. This uncertainty makes investors nervous and can lead to three negative outcomes:
Founders using pre-money SAFEs face a planning nightmare: you can't accurately model your Series A cap table until you close Series A. Need to know how much you'll own after Series A to decide if a term sheet is acceptable? With pre-money SAFEs, you're working with estimates that could be off by 3-5 percentage points. That uncertainty hamstrings your ability to negotiate Series A terms confidently.
Some advisors claim pre-money SAFEs are "more founder-friendly" because they mathematically result in less founder dilution when raising multiple SAFEs. This is technically true but practically misleading. Yes, pre-money SAFEs dilute founders 1-2 percentage points less in a typical multi-SAFE scenario. But that minor gain comes at massive costs:
Trading 1.5 percentage points of mathematical dilution for total planning chaos is not founder-friendly — it's founder-hostile.
While post-money SAFEs are the clear default for 2025, there are exactly three scenarios where pre-money SAFEs might be appropriate:
If you're raising one SAFE from one investor (or a single syndicated round) and you're certain you won't raise additional SAFEs before Series A, the pre-money vs post-money distinction becomes academic. With only one SAFE, there's no stacking problem, and pre-money SAFEs actually dilute founders slightly less because the option pool dilution is shared. However, even in this case, post-money is simpler and more standard.
A small number of experienced angel investors and funds intentionally prefer pre-money SAFEs because they're willing to accept dilution risk in exchange for supporting founders. These investors understand the stacking math and deliberately choose to share the dilution burden from future SAFEs. This is rare — fewer than 5% of angel investors actively prefer pre-money SAFEs in 2024.
In some international markets (particularly parts of Europe, Latin America, and Asia), post-money SAFE adoption lags the US by 2-4 years. If you're raising in a market where 60%+ of investors are still using pre-money SAFEs, you may need to accommodate local norms. That said, even international markets are rapidly shifting to post-money format as Y Combinator's influence expands globally.
Outside these three narrow exceptions, founders should default to post-money SAFEs. The transparency, predictability, and market standardization benefits massively outweigh any marginal mathematical dilution advantages of pre-money SAFEs. When 87% of the market uses one format, that format is the right choice unless you have a compelling specific reason to deviate.
Calculating dilution with post-money SAFEs is straightforward:
SAFE Investor Ownership = Investment Amount ÷ Post-Money Valuation Cap
Example: $500K investment ÷ $8M post-money cap = 6.25% ownership
With multiple post-money SAFEs, simply calculate each independently and add them:
Your ownership after SAFEs = Your pre-SAFE ownership × (100% - Total SAFE %)
If you owned 70% before raising those SAFEs, you'll own: 70% × (100% - 9%) = 63.7% after conversion.
Pre-money SAFE dilution requires solving for all SAFEs simultaneously because they dilute each other. The formula is:
SAFE Investor Ownership = (Investment Amount ÷ Pre-Money Cap) ÷ (1 + Sum of All SAFE Investment Amounts ÷ Their Respective Pre-Money Caps)
Example with two pre-money SAFEs:
Calculation:
Notice that pre-money SAFEs result in 8.26% total dilution vs 9.00% with post-money SAFEs — founders save 0.74 percentage points. But you need a calculator and recursive formulas to figure this out, whereas post-money math is simple addition.
Both pre-money and post-money SAFEs get diluted by the option pool creation at Series A. Typically, Series A investors require a 15-20% option pool created before their investment, which dilutes everyone proportionally. Key difference: With post-money SAFEs, you can calculate option pool dilution easily because you know your pre-option-pool ownership. With pre-money SAFEs, option pool dilution adds another layer of uncertainty until Series A terms are finalized.
The most common mistake is defaulting to pre-money SAFEs because an investor sends a pre-money template or a lawyer uses an old form. 47% of founders using pre-money SAFEs in 2024 say they didn't consciously choose pre-money — they just used whatever template was provided (Silicon Hills Lawyer survey, 2024). This is dangerous. Always explicitly choose post-money unless you have a specific reason for pre-money.
Some founders raise one SAFE as pre-money and another as post-money, creating a cap table nightmare. The two formats calculate dilution differently and can't be easily combined in cap table software. Pick one format and stick with it across all SAFEs. The industry standard is post-money — use it consistently.
Some investors argue: "We'll do a post-money SAFE, but we want a $6M cap instead of $8M to offset the fact that post-money SAFEs dilute you more." This is investor-favorable logic disguised as founder protection. A $6M post-money cap gives investors significantly more ownership than an $8M pre-money cap, even accounting for stacking effects. Don't accept artificially low post-money caps — negotiate post-money caps that reflect your true valuation, not artificially deflated numbers.
The biggest advantage of post-money SAFEs is that you can model dilution scenarios easily — but only if you actually do the modeling. 68% of founders using post-money SAFEs never run dilution scenarios before signing (AngelList data, 2024). Use a SAFE calculator to model best-case, base-case, and worst-case Series A valuations and see how much ownership you'll have under each scenario.
When raising your second or third SAFE, many founders only think about the new SAFE in isolation. Critical mistake: Always consider cumulative dilution across all SAFEs. If you've already raised two SAFEs totaling 12% dilution and a new investor wants another 8% SAFE, you're now giving away 20% to SAFE holders before Series A even starts. That might be too much. Model the total stack, not individual tranches.
Whether you're using post-money or pre-money SAFEs (though you should use post-money), a comprehensive SAFE calculator should let you model:
Before signing any SAFE, model these five scenarios using a SAFE calculator:
The founder who runs all five scenarios before signing has a massive advantage over the founder who signs blind. You'll negotiate better terms, set appropriate valuation caps, and avoid surprises at Series A.
Run the same scenario in both post-money and pre-money format to see the real difference. Example inputs:
Results with post-money SAFEs:
Results with pre-money SAFEs:
The founder gains 1.4 percentage points with pre-money SAFEs, but neither the founder nor the SAFE investors knew what they would own until Series A closed. Is 1.4% worth 12-18 months of uncertainty? For 87% of founders in 2024, the answer is no.
Post-money SAFEs are better for founders in virtually all scenarios. While pre-money SAFEs result in slightly less mathematical dilution when raising multiple SAFEs (typically 1-2 percentage points less), post-money SAFEs provide transparency and predictability that enable better decision-making. The ability to model your cap table accurately and know exactly what you're selling is worth far more than marginal dilution savings.
You can, but you absolutely shouldn't. Mixing pre-money and post-money SAFEs creates massive cap table complexity because the two formats calculate dilution using incompatible formulas. Most cap table software can't accurately model mixed SAFE types, and you'll confuse both yourself and your investors. Pick one format (post-money) and use it consistently across all SAFEs.
87% of all SAFEs signed in 2024 were post-money format, and that percentage is expected to reach 90%+ in 2025 (Carta data). Post-money SAFEs are the overwhelming industry standard. Any investor pushing for pre-money SAFEs in 2025 is either using outdated templates or trying to gain an advantage through founder confusion.
Y Combinator switched to post-money SAFEs in 2018 because the transparency and predictability benefits outweigh the minor dilution advantages of pre-money SAFEs. Founders couldn't accurately calculate dilution with pre-money SAFEs when raising multiple rounds, leading to poor decision-making and cap table surprises. The 1-2 percentage point dilution savings from pre-money SAFEs isn't worth the planning chaos.
Not inherently — the valuation cap is a negotiated number based on your company's value, stage, and market conditions. However, some investors try to negotiate lower caps on post-money SAFEs by arguing that post-money format requires a "discount" to offset higher founder dilution. This is investor-favorable logic. Your valuation cap should reflect your company's value, not the SAFE format. A $10M company should raise at a $10M cap whether using post-money or pre-money SAFEs.
If an investor insists on a pre-money SAFE in 2025, you should ask why. Legitimate reasons (sophisticated angels who want to share dilution risk) are rare. Illegitimate reasons (using confusion to gain advantage) are more common. Educate the investor on post-money SAFEs and explain that 87% of the market uses post-money format. If they still insist, consider whether you want to work with an investor who is either uninformed about current standards or deliberately seeking non-standard terms.
The conversion is straightforward: Take the pre-money valuation cap and add the SAFE investment amount to get the post-money cap. Example: A $500K investment on a $6M pre-money cap becomes a $500K investment on a $6.5M post-money cap ($6M + $500K). This maintains approximately equivalent economics while switching to the clearer post-money format. However, negotiate the actual cap number based on your company's value, not mechanical conversions.
Y Combinator partners consistently advise portfolio companies to only use post-money SAFEs and to treat the format as non-negotiable. If an investor pushes for pre-money SAFEs, YC's guidance is to educate them and hold firm. The transparency benefits of post-money SAFEs are too important to compromise, and founders who cave on this point often face cap table problems down the line.
Law firm Cooley LLP, which processes thousands of SAFEs annually, advises: "The valuation cap is 3-5x more important than the discount rate in determining founder dilution." Focus your negotiation energy on the cap, not the discount. A 20% discount is industry standard and almost never matters because the cap triggers first in successful companies. Negotiate hard on the cap, accept standard terms on the discount.
Watch for these red flags that suggest an investor is using information asymmetry to gain unfair advantage:
If an investor suggests using a pre-money SAFE, try this response: "I appreciate the offer, but we're using post-money SAFEs for this round to maintain consistency and transparency across all our investors. 87% of SAFEs in 2024 are post-money format, and that's the standard we're following. Happy to discuss the valuation cap or other terms, but the post-money format is how we're structuring the round."
This response is firm but professional, grounded in market data, and shows you're informed. Most investors will immediately accept post-money terms when they see you understand the difference.
The pre-money vs post-money SAFE debate is over. Post-money SAFEs have won with 87% market adoption, and that percentage will only increase as remaining pre-money holdouts modernize their processes. For first-time founders raising pre-seed and seed capital in 2025, the decision is simple: use post-money SAFEs.
The mathematical dilution advantage of pre-money SAFEs (1-2 percentage points less founder dilution when raising multiple SAFEs) is real but meaningless compared to the transparency disadvantages. Founders who can't model their cap table accurately make worse decisions, negotiate from weaker positions, and experience nasty surprises at Series A. The certainty of knowing exactly what you're selling is worth far more than 1.5 percentage points of equity.
Y Combinator made the right call in 2018, and the market has validated that decision. Every data point supports post-money SAFEs as the superior format for both founders and investors. The faster remaining pre-money usage disappears, the better for everyone in the ecosystem.
Before signing your next SAFE, take 10 minutes to model both post-money and pre-money scenarios using a SAFE calculator. Input your actual terms — investment amount, valuation cap, and Series A assumptions — and see the real dilution difference between the two formats.
You'll discover what 87% of founders have already learned: the transparency of post-money SAFEs is worth far more than the marginal dilution savings of pre-money SAFEs. When you can model your cap table accurately and know exactly what you're selling, you make better decisions, negotiate more confidently, and avoid surprises at Series A.
The choice between post-money and pre-money SAFEs isn't actually a choice in 2025 — it's a test of whether you're using current best practices or outdated formats. Choose post-money SAFEs. Model your dilution scenarios. Negotiate from a position of knowledge, not uncertainty. Your equity is your most valuable asset as a founder — protect it with transparency and data-driven decisions.
Remember: 87% of SAFEs are post-money for a reason. Join the majority. Use the standard. Build on certainty, not guesswork.
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