Post-money cap math

Y Combinator gives founders a warning in one line: “Five $100k SAFEs at a $5M cap is 10% sold, not 2%.” The arithmetic is easy. But founders who sign SAFEs one at a time frequently lose count of the total. Make a guess first, then learn the math that makes the total easy to keep.

Predict first

You sign five SAFEs. Each SAFE is $100K at a $5M post-money cap. How much of the company did you sell in total?

Type a guess before you continue. A guess first, even a wrong one, makes the answer easier to remember.

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One division

A post-money SAFE has a cap that includes the money of all SAFEs. In this module, “post-money cap” is short for post-money valuation cap. With a post-money cap, the part of the company that a SAFE buys is one division:

SAFE ownership = Amount ÷ Post-money cap
10%            = $1M    ÷ $10M

This percent is the part of the company that the SAFE owns just before the priced round. The YC form measures it on a share count named the Company Capitalization. That count includes all shares, all options, the option pool, and all SAFEs. The lesson How a SAFE converts, step by step shows the full definition.

The word “post-money” confuses many founders. Here, it refers to the SAFE money, not to the money of the subsequent priced round. The cap measures the company after all SAFE money and before the money of the priced round.

Start from the money and the percent

The equation has three numbers. If you know two of them, you can calculate the third. YC tells founders to use it in this sequence: “Pick the fundraise amount. The valuation cap follows.”

Northwind wants to raise $1M, and Ada and Ben agree to sell 15% for it. The cap follows:

Post-money cap = Amount ÷ Ownership
$6.67M         = $1M    ÷ 15%
Pre-money      = $6.67M − $1M = $5.67M

Northwind does not always raise the full amount. On a $6.67M cap, $500K sells 7.5% and $800K sells 12%. The lesson How valuations are set shows how founders select the money and the percent.

Work it out

Northwind wants to raise $2M on SAFEs and sell 12.5% of the company. What post-money cap gives that result?

Your answerCheck

Different caps for different investors

A company does not have to give every investor the same cap. YC gives an example with two caps in one round:

Lower cap  = $500K ÷ $5.5M = 9.09%
Higher cap = $500K ÷ $8.3M = 6.02%
Total                      = 15.11%

The investor at the lower cap gets a larger part for the same money. In 2010, Paul Graham wrote that lower caps reward the investors who commit first. He also wrote: “Different terms for different investors is clearly the way of the future.” The math does not change: divide each amount by its own cap, then add the percents.

Several SAFEs: add the percents

Most companies sign more than one SAFE before the priced round. With post-money SAFEs, each SAFE keeps its own percent, and you add the percents to get the total. The sale of many SAFEs before a priced round has a name: SAFE stacking.

Here is a stack of three SAFEs at different caps. Before the SAFEs, the founders own 85% of the company, and the option pool and the granted options own 15%.

The founder sold “only 10% to 15%” on each SAFE. But together, the three SAFEs sold 40% before the Series A. The founders now own 85% × (1 − 40%) = 51%.

Who pays for each new SAFE

When S3 comes, S1 and S2 keep their 10% and 15%. Their own contracts fix their percents. Thus, all of the new 15% comes from the holders without a fixed percent:

• The founders
• The option pool and the employees with options
• The other common holders

YC designed the post-money SAFE to work this way. A SAFE investor knows the percent at signature, and no subsequent SAFE can decrease it. The cost of that certainty goes to the founders.

Sign SAFEs one at a time

The widget keeps the running total for you. Sign five SAFEs of $100K at a $5M cap. Then change the cap or the amount, and sign a different SAFE. Each row shows the cap table right after one signature. Look at the ochre part of each row: the earlier SAFEs keep their size, and the founders’ green part decreases.

Calculator

Sign SAFEs one at a time

Set the terms of the next SAFE and sign it. Keep your eye on the total, not on the size of each SAFE.

Next SAFE: amount

Next SAFE: post-money cap

$5M

Sign this SAFE

Next SAFE sells

2%

$100K ÷ $5M

Total sold

0%

0 SAFEs signed

Founders keep

100%

Money raised

$0

Nothing yet

Ownership if the SAFEs converted today

No SAFEs yet, so the founders own 100%. The next SAFE sells $100K ÷ $5M = 2%. Sign it and watch the total.

The same math in shares

The percents are easy, but a cap table counts shares. The SAFE shares come from the Company Capitalization, and the founders’ shares do not change. Here is Northwind with two SAFEs and no option pool.

Worked example · step 1 of 5

Northwind: two SAFEs as shares

1. 1

   Find the percent of each SAFE

   SAFE A is $500K at an $8M post-money cap. SAFE B is $500K at a $10M post-money cap.

   SAFE A = $500,000 ÷ $8,000,000  = 6.25%
   SAFE B = $500,000 ÷ $10,000,000 = 5.00%
   Total                          = 11.25%

Show step 2Show all steps

The SAFE with the lower cap pays a lower price, so it gets more shares for the same $500K. That is the reward for the investor who took the risk at a lower cap.

Work it out

Northwind signs three post-money SAFEs: $250K at a $5M cap, $500K at an $8M cap, and $1M at a $16M cap. What percent of the company do the SAFEs sell in total?

Your answerCheck

How large a SAFE round can get

The cap must be much larger than the money. $2.5M on a $5M post-money cap sells 50% of the company. $5M on a $5M cap sells 100%, and the founders own nothing. The widget stops you before the total gets to 100%. A real cap table does not stop you.

The SAFE percent is also not the last word. At the priced round, the new money and the new option pool dilute the SAFE holders and the founders together. In the worked example of How a SAFE converts, step by step, two SAFEs of 10% each become 7.35% each after the Series A.

How much of the company to sell

The same division tells you what a typical SAFE costs. At the Q2 2026 medians, these SAFEs sell the following parts of a company:

Old rules of thumb give a limit for the total. In 2013, Paul Graham advised founders to keep the first, accelerator stage at less than 15%. He also advised them not to sell more than 25% in the seed round. Geoff Ralston of YC wrote a guide in the middle of the 2010s. It says that most rounds “will require up to 20% dilution and you should try to avoid more than 25%.” Those numbers are old, but the method is current: decide on a total first, then divide it across your SAFEs.

The formula also works backward as a limit. Suppose that Northwind decides to sell no more than 20% on SAFEs, and it needs $2M. Then the average cap, the total money ÷ the total percent, must be at least $2M ÷ 20% = $10M. Each SAFE at a lower cap uses more of the 20%. The widget above shows this average under the money raised.

A median cap of $10M for a round of less than $250K tells you something. Small rounds sell a small part of the company. $200K on a $10M cap is only 2%. That small number is the reason why founders forget it.

Quiz · question 1 of 5

Test what you learned

You raise $750K on a post-money SAFE with a $5M cap. What does the investor own just before the priced round?

• A11.25%
• B13.04%
• CNobody can know until the priced round
• D15%