Pre-money Versus Post-money SAFE: What's The Difference (and Does It Matter)?

TLDR: The post-money SAFE provides additional certainty to both founders (in respect of their expected dilution) and investors (in respect of their expected ownership level) upon conversion of the SAFE, however care should be taken to ensure that both parties are aligned on the type of SAFE chosen and have set the valuation cap accordingly.

The Simple Agreement for Future Equity

Y Combinator first introduced the Simple Agreement for Future Equity (SAFE) to the startup and venture capital community in 2013. The original SAFE was in many ways Y Combinator's response to the then prevalent form of early-stage financing: the convertible note. In contrast to the convertible note, as the name implies, the SAFE was simpler (in both features and typical length), and was completely standardized, thereby reducing transaction costs for very early stage companies. Use of the original SAFE quickly gained momentum, and by 2018 it was a well-known and widely used form, but was not