SAFE Agreement Calculator

What Is a SAFE?

A SAFE, or Simple Agreement for Future Equity, is a fundraising tool startups use to raise capital without the complexities of traditional equity financing. SAFEs are agreements between investors and founders where funds are provided in exchange for future equity, typically at a discounted rate or with a valuation cap during the next funding round.

Why SAFEs Matter

SAFEs offer startups a simple, founder-friendly way to secure funding, making them a widely-used instrument in the early stages of company growth. For investors, SAFEs provide an opportunity to support startups before formal valuations are set, with the potential for discounted equity and protection from dilution through valuation caps. However, understanding how the conversion terms impact ownership is key to ensuring a fair agreement for both parties.

How Does the SAFE Agreement Calculator Work?

Our SAFE Agreement Calculator is designed to help you understand the potential equity you may receive when your investment converts into shares during a future funding round. It factors in critical SAFE terms such as the valuation cap, discount rate, and share price in the next round, providing an accurate projection of your ownership percentage.

Key Inputs:

1. Investment Amount: The total capital you’re investing via the SAFE.
2. Valuation Cap: The maximum company valuation at which your SAFE converts into equity, ensuring you receive more shares if the company valuation exceeds this cap.
3. Discount Rate: A percentage reduction applied to the share price, giving you an advantage over new investors in the next funding round.
4. Next Round Share Price: The price per share during the company’s next qualifying financing event.
5. Total Shares Outstanding: The number of company shares prior to the financing event.
6. Total Round Raised: The total amount the company plans to raise during this round.

How It Calculates:

The calculator compares the discounted share price and the valuation cap price to determine the most favorable conversion terms for your investment. By calculating the number of shares you’ll receive and your ownership percentage post-financing, it gives you a clear understanding of your equity position after the SAFE converts.

For more information on SAFEs and their terms, click here to read our article or explore our SAFE Term Sheet.

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