# YC Post-Money SAFE — Valuation Cap

**Template version:** YC Standard (2018 revision)
**Suitable for:** Seed rounds, pre-Series A
**Recommended when:** You have traction and want to set a hard cap on investor ownership at conversion

---

## Key Terms Summary

| Term | Value |
|------|-------|
| **Type** | Simple Agreement for Future Equity (SAFE) |
| **Post-money or pre-money** | Post-money |
| **Valuation cap** | $[VALUATION CAP] |
| **Discount rate** | None |
| **Interest rate** | None |
| **Maturity date** | None |
| **Conversion trigger** | Equity Financing (priced round) |

---

## How the Valuation Cap Works

The cap sets the **maximum valuation** at which the SAFE converts to equity.

**Example:**
- You raise a SAFE with a $5M post-money cap
- Investor puts in $500K → they own **$500K / $5M = 10%** post-money at conversion
- You later raise a Series A at a $20M pre-money valuation
- The SAFE converts at the $5M cap, not the $20M Series A price

**Key insight:** Post-money cap means the investor's ownership percentage is fixed at signing. Stack multiple SAFEs? Each dilutes the others — but not the investors. This is why founders need to model the full SAFE stack before closing.

---

## Conversion Mechanics

At an **Equity Financing** (new priced round), the SAFE converts to:
- **Preferred stock** of the same class issued in the new round
- At a price per share equal to: `SAFE amount / (cap ÷ (cap + investment amount))`

**Simplified:** If your SAFE stack plus new investment exceeds your cap, investors pay the cap price. If the new round values you higher than the cap — they win.

---

## What This Template Does NOT Include (Standard YC Omissions)

- ❌ **Pro-rata rights** — not included by default. Negotiate separately.
- ❌ **Information rights** — not included. Investor cannot demand financials.
- ❌ **Board seats** — not included. SAFE holders have no governance rights.
- ❌ **MFN clause** — not included in this variant. See MFN template.

---

## Standard Protective Provisions

This template includes:
- **Dissolution / Liquidation**: Investor gets purchase amount back before common stockholders (but after debt holders)
- **Change of control**: Investor elects to receive either (a) purchase amount or (b) conversion at cap, whichever is greater

---

## Template Document

```
SIMPLE AGREEMENT FOR FUTURE EQUITY

THIS CERTIFIES THAT in exchange for the payment by [INVESTOR NAME] (the "Investor")
of $[PURCHASE AMOUNT] (the "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.

VALUATION CAP: $[VALUATION CAP]

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 Conversion Price.

"Conversion Price" means the lesser of: (i) the Safe Price and (ii) the Discount
Price. "Safe Price" means the price per share equal to the Valuation Cap divided
by the Company Capitalization. "Discount Price" means the price per share of the
Standard Preferred Stock, as applicable, sold in the Equity Financing multiplied
by the Discount Rate.

(b) Liquidity Event. If there is a Liquidity Event before the expiration or
termination of this instrument, the Investor will, at its option, either:
(i) receive a cash payment equal to the Purchase Amount; or (ii) automatically
receive from the Company a number of shares of Common Stock equal to the
Purchase Amount divided by the Liquidity Price.

(c) Dissolution Event. If there is a Dissolution Event before this instrument
expires or terminates, the Company will pay an amount equal to the Purchase Amount,
due and payable to the Investor immediately prior to, or concurrent with, the
consummation of the Dissolution Event.

2. COMPANY REPRESENTATIONS

(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation...

[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 terms to this YC standard
- Flag any non-standard clauses
- Model your cap table at different conversion scenarios
- Identify missing protective provisions

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