# YC Post-Money SAFE — Discount Only

**Template version:** YC Standard (2018 revision)
**Suitable for:** Pre-product, pre-revenue seed investments
**Recommended when:** Valuation is too uncertain to set a cap

---

## Key Terms Summary

| Term | Value |
|------|-------|
| **Type** | Simple Agreement for Future Equity (SAFE) |
| **Post-money or pre-money** | Post-money |
| **Valuation cap** | None |
| **Discount rate** | [DISCOUNT RATE, e.g. 20%] |
| **Interest rate** | None |
| **Maturity date** | None |
| **Conversion trigger** | Equity Financing (priced round) |

---

## How the Discount Works

The investor converts at a **percentage below the price** of the next priced round.

**Example:**
- SAFE has a 20% discount
- Series A priced at $2.00/share
- SAFE investor converts at $2.00 × (1 − 0.20) = **$1.60/share**
- Investor gets more shares for the same money — that's their compensation for the early risk

**Key insight:** Unlike a cap, the discount doesn't bound upside. If your Series A is at a $100M valuation, a 20% discount still only gives them 20% off a very high price. Caps are more founder-limiting in hot markets; discounts are safer for founders who expect to raise at high valuations.

---

## Conversion Mechanics

At an **Equity Financing**, the SAFE converts to Preferred Stock at:

```
Conversion Price = Series A Price per Share × (1 − Discount Rate)
```

Investor receives:
```
Shares = Purchase Amount / Conversion Price
```

---

## Risk Profile (vs. Cap SAFE)

| Scenario | Cap SAFE | Discount SAFE |
|----------|----------|---------------|
| Low Series A valuation | Converts at cap (potentially below round price) | Converts at discount to round price |
| High Series A valuation | Converts at cap — investor wins big | Converts at discount — investor wins less |
| No Series A raised | No conversion, no repayment | No conversion, no repayment |

**For founders raising in uncertain markets:** A discount-only SAFE gives you flexibility. You're not locked into a cap you negotiated at year 0 being used against you at year 3.

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## What This Template Does NOT Include

- ❌ **Pro-rata rights** — not included by default
- ❌ **Valuation cap** — this variant intentionally omits it
- ❌ **Information rights**
- ❌ **Board seats or governance rights**

---

## Template Document

```
SIMPLE AGREEMENT FOR FUTURE EQUITY

THIS CERTIFIES THAT in exchange for the payment by [INVESTOR NAME] (the "Investor")
of $[PURCHASE AMOUNT] on or about [DATE], [COMPANY NAME], a [STATE] corporation
(the "Company"), hereby issues to the Investor the right to certain shares of the
Company's capital stock, subject to the terms described below.

DISCOUNT RATE: [DISCOUNT RATE]%

1. EVENTS

(a) Equity Financing. If there is an Equity Financing before the expiration or
termination of this instrument, on the initial closing of such Equity Financing,
this instrument will automatically convert into the number of shares of SAFE
Preferred Stock equal to the Purchase Amount divided by the Discount Price.

"Discount Price" means the price per share of the Standard Preferred Stock sold
in the Equity Financing multiplied by the Discount Rate.

"Discount Rate" means [100% minus the Discount Rate percentage stated above].

(b) Liquidity Event. [Same as standard YC SAFE]

(c) Dissolution Event. [Same as standard YC SAFE]

[FULL DOCUMENT CONTINUES — CONSULT YOUR ATTORNEY FOR THE COMPLETE VERSION]
```

---

## Before You Sign

Upload your actual SAFE to [Robaer.ai](https://robaeros.polsia.app/review) for an AI review that will:
- Compare your discount rate to market norms (10–20%)
- Flag investor-favorable additions beyond standard terms
- Model cap table impact at different Series A valuations
- Check for non-standard conversion triggers

**This template is for educational purposes. Consult a qualified attorney before signing any investment document.**