How much your SAFEs already own
You signed the first one eighteen months ago and you have not thought about it since. The percentages are already decided, and you can work them out tonight without a spreadsheet.
With a post-money SAFE, the investor's percentage is their cheque divided by the cap. That is the whole calculation. The cap is a post-money cap, meaning after all the SAFEs convert but before the new round's money arrives, so it fixes what the holder owns at the moment immediately before you take in new money.
Three SAFEs, signed over eighteen months
Start with nine million shares: 8,100,000 held by founders and a 900,000 option pool.
| Signed | Cheque | Post-money cap | What they own | |
|---|---|---|---|---|
| SAFE A | month 0 | $300,000 | $6,000,000 | 5.00% |
| SAFE B | month 9 | $250,000 | $10,000,000 | 2.50% |
| SAFE C | month 15 | $300,000 | $12,000,000 | 2.50% |
| $850,000 | 10.00% |
$300,000 ÷ $6,000,000 = 5.00%. $250,000 ÷ $10,000,000 = 2.50%. $300,000 ÷ $12,000,000 = 2.50%.
Note that SAFE C wrote a bigger cheque than SAFE B and owns the same percentage, because it came in at a higher cap. And note what the first cheque cost you. SAFE A took 5.00 points for $300,000. SAFE C took 2.50 points for exactly the same $300,000. Early money is the most expensive money on your cap table, which is why the first cap matters more than the ones after it.
Who paid for all of it
The three SAFEs own 10.00% between them, so everyone who was there before them shares the remaining 90.00%, split in the same proportion as before.
| Holder | Shares | Before | After all three convert |
|---|---|---|---|
| Founders | 8,100,000 | 90.0% | 81.0% |
| Option pool | 900,000 | 10.0% | 9.0% |
| SAFE A | 500,000 | 5.0% | |
| SAFE B | 250,000 | 2.5% | |
| SAFE C | 250,000 | 2.5% | |
| Total | 10,000,000 | 100.0% |
Look at what did not move. When you signed SAFE B, SAFE A's 5.00% did not move. When you signed SAFE C, neither of the first two moved. Every one of those percentages was fixed on the day it was signed, and every subsequent SAFE came out of the founders and the pool.
Ten points of the company, nine of them yours, gone before a priced round has happened and before anyone has set a price.
Then the round arrives
Say the seed comes in at $2,000,000 on a $10,000,000 post-money valuation. The new investor takes 20%, and this time everybody is diluted together, SAFE holders included, because the lock only ran up to the moment the new money landed.
| Holder | Shares | Ownership |
|---|---|---|
| Founders | 8,100,000 | 64.8% |
| Option pool | 900,000 | 7.2% |
| SAFE A | 500,000 | 4.0% |
| SAFE B | 250,000 | 2.0% |
| SAFE C | 250,000 | 2.0% |
| New investor | 2,500,000 | 20.0% |
| Total | 12,500,000 | 100.0% |
Founders went from 90.0% to 81.0% to 64.8%. Only the last of those three steps was a priced round.
What to check in your own documents
- Is each SAFE a post-money SAFE? The document says so on its face. If it is, your percentage arithmetic is a single division and you can do all of them in five minutes.
- Add up your caps as percentages, not as dollars. $850,000 raised tells you nothing. 10.00% tells you everything, and it is the number to carry into any conversation about the next round.
- Check whether an option pool increase is part of the round you are discussing. If a top-up is taken out of the pre-money, it lands on the founders on top of everything above. That is a separate calculation and it is worth doing before you agree to a valuation.
- Watch the next cap you sign. Every point you hand over now is a point that is not available to give the lead investor later, and the lead will still want their percentage.
Pre-money SAFEs exist and behave differently. If your documents are pre-money, the arithmetic on this page does not apply to them.
Run it on your own stack
Three SAFEs by hand is a division you can do on your phone. What is harder is holding the answer against your real cap table, with your real pool, and then seeing what the round after this one does to the same figure.
Promythia converts each instrument against the cap table you enter, and shows you this round and the next one. Create a free account and put your real stack in.
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