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What is a post-money SAFE?
What is a post-money SAFE?
Updated over a year ago

A post-money valuation is the valuation of your startup taking into account all the money that you are about to raise (i.e. what it will be worth once you close your equity round).

The Capitalisation Definition is used to calculate the price per share that will be used when the SAFE converts to share if the SAFE converts using the valuation cap. A post-money SAFE includes the shares given to converting convertibles in the “Capitalisation Definition”.

A SAFE is essentially an agreement between an investor and your company where the investor gives you money now for a good deal in the future when you sell shares to other investors at a specific price.

The deal is either based on a discount on the price per shares that others will be paying, or a price per share calculated by using the valuation cap and the capitalisation definition. The “discount”, “valuation cap” and “capitalisation definition” are all terms you can find in the SAFE document.

Post-money SAFEs have a standard definition used for the “capitalisation definition”. You can determine if your SAFE is post-money by looking at the title of the SAFE for the words “post-money” or you can look for the “capitalisation definition” term. If this term has any reference to including “other converting securities” or “SAFEs” or “convertibles”, then it is a post-money SAFE. Post-money SAFEs that convert using the valuation cap will NOT be diluted by other convertibles that your company has.

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