Venture Capital & Seed Financing
Post-Money SAFE vs Pre-Money SAFE Dilution Formula
Compare stacked YC Post-Money SAFE ownership locks (alpha_i = I_i / Cap_i) against Legacy Pre-Money SAFEs that mutually dilute each other prior to a priced Series A round.
See why stacked Post-Money SAFEs dilute ONLY founders—never earlier SAFE holders!
Founders raising sequential seed tranches on Y Combinator Post-Money SAFEs often assume SAFE #2 dilutes SAFE #1 just like a priced equity round—it does NOT! Each Post-Money SAFE locks an exact pre-Series-A ownership fraction alpha_i = I_i / Post_Cap_i (when the Series A prices above all caps), meaning all stacked SAFEs sum additively to alpha_SAFE = I_1 / C_1 + I_2 / C_2 out of the Founders’ pre-Series-A block (1 - alpha_SAFE) BEFORE the priced Series A investor takes its post-money stake alpha_A! Under Legacy Pre-Money SAFEs on S_0 initial founder shares, each SAFE converts at C_i / S_0 into S_0 * (I_i / C_i) shares, so SAFEs mutually dilute each other into S_0 * (1 + I_1/C_1 + I_2/C_2) pre-Series-A shares, leaving Founders with 1 / (1 + I_1/C_1 + I_2/C_2) > 1 - (I_1/C_1 + I_2/C_2)!
Verify on Founder_Shares S_0 = 8.00M (B2), SAFE_1_Check I_1 = $1.50M (B3) at Cap C_1 = $10.00M (B4 -> alpha_1 = 15.00%), SAFE_2_Check I_2 = $1.00M (B5) at Cap C_2 = $20.00M (B6 -> alpha_2 = 5.00%), and Priced_Series_A_Ownership alpha_A = 0.20 (20.00%, B7): (1) Stacked Post-Money SAFEs lock 15% + 5% = 20.00% pre-Series-A, leaving Founders 0.8000 pre-Series-A and 0.8000 * (1 - 0.20) = 0.6400 (64.00%) post-Series-A; (2) Legacy Pre-Money SAFEs issue 1.20M + 0.40M = 1.60M shares alongside 8.00M founder shares (9.60M total), leaving Founders (8.00 / 9.60) * 0.80 = 0.6667 (66.67%) post-Series-A—a -0.0267 (-2.67 percentage points) hidden founder haircut from stacking Post-Money SAFEs!
| Seed Cap Table Metric ($1.5M@$10M + $1M@$20M SAFEs, 20% Series A) | Formula | Verified Output |
|---|---|---|
| Total Stacked Post-Money SAFE Lock | I_1 / C_1 + I_2 / C_2 | 0.2000 (20.00% Pre-Series-A) |
| Founder Post-Series-A (Post-Money SAFEs) | (1 - (I_1/C_1 + I_2/C_2)) * (1 - alpha_A) | 0.6400 (64.00%) |
| Founder Post-Series-A (Pre-Money SAFEs) | (1 / (1 + I_1/C_1 + I_2/C_2)) * (1 - alpha_A) | 0.6667 (66.67%) |
| Stacking Haircut vs Pre-Money SAFEs | Founder_PostSAFE - Founder_PreSAFE | -0.0267 (-2.67% Founder Equity) |
Founder Post-Series-A Ownership Under Stacked Post-Money SAFEs
Guard against over-subscribed SAFE stacks where I_1 / C_1 + I_2 / C_2 >= 1 (founders wiped out to <= 0% before Series A even closes)!
=LET(sh_f, B2, i_s1, B3, cp_1, B4, i_s2, B5, cp_2, B6, al_a, B7, IF(OR(sh_f <= 0, i_s1 < 0, cp_1 <= 0, i_s2 < 0, cp_2 <= 0, al_a <= 0, al_a >= 1), "Invalid SAFE Stack", LET(al_sf, i_s1 / cp_1 + i_s2 / cp_2, IF(al_sf >= 1, "Over-Subscribed SAFE Stack", ROUND((1 - al_sf) * (1 - al_a), 4)))))Legacy Pre-Money SAFE Founder Share & Stacking Wedge Formula
Notice that when only a single tiny SAFE exists (set I_2 = 0, I_1 = $0.5M on $10M -> 5%), the wedge shrinks to 0.7600 vs 0.7619 (-0.19%), whereas heavy multi-SAFE bridges widen the gap quadratically!
=LET(al_sf, B3 / B4 + B5 / B6, IF(ISTEXT(E3), E3, ROUND(((1 - al_sf) - 1 / (1 + al_sf)) * (1 - B7), 4)))Try the example
Use the original values or change them to test your understanding.