Y Combinator's post money SAFE has no maturity date: it is designed to end in a priced round, a sale or listing, or a shutdown, and each ending pays the investor differently. This episode is for angels who sign SAFEs and want to know what the valuation cap form actually says.

In this episode

• Ownership on a post money SAFE is the purchase amount divided by the post money valuation cap, measured just before the priced round; Y Combinator's guide says SAFEs are not diluted by each other but are diluted by the new money and any new or increased option pool in that round.
• In a priced round the SAFE converts automatically into preferred stock: standard preferred at the round's lowest price, or SAFE preferred stock at the SAFE price (the cap divided by the company capitalization), whichever gives more shares.
• In a sale, direct listing or IPO the SAFE pays the greater of the purchase amount and the converted amount at the cap; in a shutdown it is entitled to the purchase amount, after debt, alongside other SAFEs and preferred stock, ahead of common stock.
• A SAFE carries no vote, and it can be amended by the company with the holders of more than half the money on SAFEs with the same cap and discount, but not the purchase amount without the investor's own consent. If the investor is not accredited at the priced round, the company may void the SAFE and return the purchase amount.

Sources

• Y Combinator, SAFE financing documents: SAFE: Valuation Cap, no Discount
• Y Combinator, Post-Money SAFE User Guide

Produced by The Brutally Honest Angel. Educational only. Not investment advice.