Model SAFE (Simple Agreement for Future Equity) conversion scenarios with valuation cap, discount, and pro-rata rights analysis.
A SAFE is money today in exchange for shares priced at a round that has not happened yet. The price comes from whichever of two formulas is more favorable: a discount off the next round's share price, or a price implied by a valuation cap. This calculator runs both for the round you enter, applies the lower price, and returns the shares and ownership percentage. Most people are surprised that with a post-money cap, the ownership percentage is fixed at signing - investment divided by the cap - while the share count itself depends on the fully diluted capitalization the day the round closes.
A concrete input and expected output from the current implementation.
Input
SAFE investment $100,000; post-money valuation cap $1,000,000; discount 20%; fully diluted shares before conversion 1,000,000; next round raises $250,000 at $1.00 per share
Expected output
Conversion price $0.80 per share (20% discount beats the $0.90 cap price). Shares issued: 125,000. Ownership at conversion: 11.11% of the company. If the cap had bound instead, ownership would be 10.00%.
The discounted price of $0.80 is below the $0.90 the $1,000,000 cap implies, so the SAFE converts at the discount. $100,000 at $0.80 buys 125,000 shares; 125,000 divided by 1,125,000 total shares is 11.11% - more than the 10% the cap alone would guarantee.
Every SAFE converts at the lower of two prices: the next round's share price reduced by the discount rate, or the cap price, which is the valuation cap divided by the fully diluted share count. The calculator computes both for the scenario you enter and applies the minimum. In a low-priced round the discount binds; in a high-priced round the cap binds and limits the investor's effective cost.
The pro-rata section prices the right to participate in the next round: the dollars required to buy your pre-round percentage of the new shares, and the ownership you keep if you pass. The two paths appear side by side, so the 'should I exercise?' decision becomes a final-percentage comparison against a known cash cost.
No. The conversion price is the lower of the two formulas, never a combination; a '20% discount, $1,000,000 cap' SAFE does not convert at 20% below the cap. If the round prices below the cap's implied price, the discount applies and the cap is unused. Above it, the cap applies and the discount is unused. The result shows which one bound.
Yes, when the cap binds: investment divided by the post-money cap is your percentage of the fully diluted company at conversion, regardless of the round's size or price. Only a discount that produces a lower price adds shares beyond that. The share count itself stays unknown until the round, because the fully diluted capitalization at that moment sets the cap price.
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