# Post-money SAFE math

> The Safe Price, Company Capitalization and conversion shares, worked on Northwind's $250,000 SAFE.

Source: https://lopifi.com/learn/ways-to-raise-startup-capital/safe/post-money-safe-math
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How does a post-money SAFE convert into shares?** The Safe Price, Company Capitalization and conversion shares, worked on Northwind's $250,000 SAFE.

YC's SAFE defines the Safe Price as the Post-Money [Valuation Cap](https://lopifi.com/md/glossary/valuation-cap) ÷ the Company Capitalization, and Company Capitalization counts, as converted, every share outstanding, every option and promised option, the unissued pool, and the converting securities — this SAFE included. It does not count a pool increase made in the round itself.

> ““Safe Price” means the price per share equal to the Post-Money Valuation Cap divided by the Company Capitalization.”

— [Y Combinator, Post-Money SAFE (Valuation Cap, no Discount), §2](https://www.ycombinator.com/documents), The Safe Price, and what Company Capitalization counts

1. **Fully diluted shares before the SAFE.** 9,000,000: the founders' 8,000,000, the 65,000 options granted and the 935,000 unissued.
2. **The SAFE's ownership.** $250,000 ÷ $5,000,000 = 5.00% of the company once the SAFE is counted.
3. **Company Capitalization.** 9,000,000 ÷ (1 − 5.00%) = 9,473,684 shares, rounded down: the SAFE's own shares are inside the total.
4. **The Safe Price.** $5,000,000 ÷ 9,473,684 ≈ $0.527778 a share.
5. **Conversion shares.** $250,000 ÷ the Safe Price = 473,684 shares of Series Seed preferred — exactly 5.00% of 9,473,684.

Northwind's SAFE, converted at its cap

*[Figure: safe conversion]*

Northwind's SAFE at the Seed: $250,000 on a $5,000,000 post-money cap against a $0.819798 round. The cap's price is lower, so it issues more shares and wins.

> **Post the SAFEs, not post the round.** YC's user guide is precise about what "post" means: the cap is post all of the SAFE money and post the options and pool that existed before the round — not post the round's new money, and not post a pool increase the round adopts. So SAFEs don't dilute each other, but the Seed's money and its new pool dilute the SAFEs like everyone else.

> “The result is that while the safes are not diluted by each other, the safes will be diluted by the new money raised in the Equity Financing.”

— [Y Combinator, Post-Money SAFE User Guide](https://www.ycombinator.com/documents), What “post-money” means: post the SAFEs and the old pool, not the round's new pool

**Use case — Stacking SAFEs.** Two more SAFEs at the same $5,000,000 cap, for $250,000 each, would take 5.00% apiece — three of them 15.00% — and the founders could read their dilution off the documents the day they signed. That arithmetic is the reason post-money SAFEs replaced pre-money ones.

## Where this page's rules come from

- [Y Combinator, Post-Money SAFE (Valuation Cap, no Discount), §2](https://www.ycombinator.com/documents) — The Safe Price, and what Company Capitalization counts (reference)
- [Y Combinator, Post-Money SAFE User Guide](https://www.ycombinator.com/documents) — What “post-money” means: post the SAFEs and the old pool, not the round's new pool (reference)

## Read further

- https://lopifi.com/md/startups/how-to-account-for-safes
- https://lopifi.com/md/accounting/safe

- **Track:** [Cap tables & raising](https://lopifi.com/md/learn/equity)
- **Part of:** [Ways to raise: SAFEs, notes, priced rounds, debt and grants](https://lopifi.com/md/learn/ways-to-raise-startup-capital) › [The SAFE](https://lopifi.com/md/learn/ways-to-raise-startup-capital/safe) — 6 min
- **Terms taught:** [Valuation cap](https://lopifi.com/md/glossary/valuation-cap), [Fully diluted](https://lopifi.com/md/glossary/fully-diluted), [SAFE](https://lopifi.com/md/glossary/safe)
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- **Next:** [MFN and pro rata side letters](https://lopifi.com/md/learn/ways-to-raise-startup-capital/safe/mfn-and-pro-rata-side-letters)
- **The course:** https://lopifi.com/md/learn