The YC SAFE Template: A Plain-English Guide for Founders

What is a SAFE?

A SAFE is an agreement between your company and an investor. The investor gives you money today. In return, they get the right to receive shares in a future financing round, typically your priced seed or Series A.

Because no valuation is fixed at signing, you skip the slow negotiation that a priced round requires. You agree on a few simple terms, sign, and the cash can arrive in days rather than weeks.

Key things to remember about a SAFE:

• It is equity-based, not debt. There is nothing to repay.
• It has no maturity date and no interest, unlike a convertible note.
• It converts to shares when a priced equity round happens, and has provisions for what happens on an exit or dissolution.
• YC publishes a standard post-money SAFE so terms are familiar to investors and founders alike.

The current YC standard is the post-money SAFE, introduced in 2018. "Post-money" means the valuation cap is measured after all the SAFE money is counted, but before the new priced round money comes in. That makes the investor's resulting ownership percentage clear and easy to calculate. The older pre-money SAFE measured the cap before other SAFE money, which made dilution harder to predict once you stacked several together.

SAFE vs convertible note: how they differ

Founders often weigh a SAFE against a convertible note. They solve the same problem, raising before a valuation, but the mechanics differ.

Dimension	YC SAFE	Convertible note
Instrument type	Equity (a warrant-like right)	Debt
Maturity date	None	Yes, often 12 to 24 months
Interest	None	Yes, typically a few percent
Repayment risk	None	Can come due if no round happens
Valuation cap	Yes (in cap variants)	Usually
Discount	Yes (in discount variants)	Usually
Speed and cost	Very fast, low legal cost	Slower, more negotiation
Standardised template	Yes, free from YC	Varies by firm

A convertible note is a real loan. If you never raise a priced round, the note can mature and, in principle, become repayable. A SAFE has no such clock. That is the single biggest practical difference and the main reason YC moved the ecosystem toward SAFEs.

The four YC SAFE variants

YC publishes four versions of the post-money SAFE. They differ in how the investor's money converts into equity later. Picking the right one is a commercial decision about how much upside an early investor gets for taking early risk.

SAFE variant	What it does	When to use
Valuation cap, no discount	Sets a maximum valuation at which the SAFE converts, so early investors get more shares if you later raise at a higher price	When investors want upside protection for backing you early
Discount, no cap	Converts at a set discount to the price of your next priced round	Simple early raises where you do not want to negotiate a cap
Cap and discount	Applies both a cap and a discount; the investor gets whichever gives them the better price	Competitive rounds where investors expect both terms
MFN, no cap, no discount	Gives the investor "most favoured nation" rights, so they automatically inherit the best terms you grant a later SAFE investor	Very early friends-and-family or pre-product cheques

A few notes on reading the table:

• A valuation cap rewards early investors if your next round prices high. The lower the cap, the more shares they get for the same money.
• A discount is usually expressed as a percentage off the round price, for example 20 percent. The standard YC discount field expects a discount, and many deals land around 10 to 20 percent.
• With cap and discount, the investor is not double-counted. They take the single outcome that gives them the better price.
• MFN SAFEs have no cap and no discount up front. The investor relies on matching whatever you later offer, so they suit the very first, smallest cheques.

The key terms, in plain English

Three fields decide how much of your company a SAFE costs you.

• Purchase amount. The cash the investor pays now. This is the only number that leaves their account today.
• Valuation cap. The ceiling valuation used to price the investor's shares when the SAFE converts. A lower cap means more shares for the investor.
• Discount rate. A percentage reduction off the price per share in your next priced round. A 20 percent discount means the SAFE investor pays 80 percent of what new investors pay.

On a post-money SAFE, ownership is refreshingly easy to estimate. If an investor puts in $200,000 on a $5,000,000 post-money cap, they are buying roughly 4 percent of the company on a post-money basis (200,000 divided by 5,000,000), before the new priced-round money dilutes everyone further. That predictability is the headline benefit of the post-money standard.

How to fill out a SAFE

At a high level, the YC SAFE is short and most fields are simple. You are mainly filling in names, the amount, and the chosen term. Here is the shape of it.

1. Company and investor details. Enter your company's legal name and the investor's legal name exactly as they should appear on the cap table.
2. Investment amount. State the purchase amount, the cash the investor is paying now.
3. Choose the variant. Use the cap version, the discount version, the cap-and-discount version, or the MFN version. Each is a separate YC file, so pick the right one rather than editing terms by hand.
4. Fill the economic term. Enter the valuation cap and/or discount you agreed. For MFN, there is no number to enter.
5. Signature blocks. The authorised signatory for the company and the investor sign and date.

Keep a clean record of every signed SAFE and the terms in each one. When your priced round arrives, your lawyer and investors will model exactly how each SAFE converts, so accuracy now saves real pain later.

You can send the document for review and signature as a single secure link rather than emailing attachments. With Plox you keep every SAFE, your deck, and supporting files in one place and see who has opened what.

Your original asset: the SAFE checklist and a worked dilution example

Two things founders ask for most: a pre-signature checklist, and a clear picture of what a cap actually costs. Here are both. Copy and paste the checklist; adapt the example to your own numbers.

SAFE pre-signature checklist (copy-pasteable)

[ ] Downloaded the current post-money SAFE from ycombinator.com/documents
[ ] Picked the right variant (cap / discount / cap and discount / MFN)
[ ] Company legal name matches the certificate of incorporation
[ ] Investor legal entity name is correct (person vs fund vs LLC)
[ ] Purchase amount confirmed and wired-amount agreed
[ ] Valuation cap entered (or intentionally left blank for MFN)
[ ] Discount rate entered if applicable
[ ] All SAFEs to date logged in a running cap-table model
[ ] Post-money ownership modelled for this SAFE plus all prior SAFEs
[ ] No legal text hand-edited, only the blanks filled
[ ] Lawyer has reviewed the terms (cap, discount, side letters)
[ ] Both signatures and dates captured
[ ] Signed copy stored and shared via a secure, trackable link

Worked dilution example

Say you raise three SAFEs on a $5,000,000 post-money cap, then a priced Series A at a $12,000,000 pre-money valuation that adds $3,000,000 of new money. On a post-money SAFE, you can read the SAFE investors' combined ownership straight off the cap.

Step	Input	Result
SAFE 1	$150,000 at $5M post-money cap	~3.0%
SAFE 2	$200,000 at $5M post-money cap	~4.0%
SAFE 3	$150,000 at $5M post-money cap	~3.0%
SAFE total	$500,000 raised	~10.0% before the round
Series A	$3M new money, $12M pre / $15M post	New investors ~20%

The lesson the example makes concrete: on the post-money standard, the SAFE holders collectively own about 10 percent before the priced round, and that block is then diluted by the new Series A money like everyone else. If you had stacked low-cap SAFEs without modelling them, that 10 percent could quietly have been 18 or 20 percent. Model as you go. These figures are illustrative; your lawyer and the actual conversion math will be exact.

Where to get the official template

Always download the SAFE from the source. The official, current templates live on Y Combinator's SAFE documents page.

• Use the post-money SAFE, YC's current standard.
• Download the specific variant you need (cap, discount, cap and discount, or MFN) as a separate file.
• Do not copy a SAFE you found in a random blog post or an old deal. Versions change, and an outdated template can create problems at conversion.

Using the official document also builds investor trust, because experienced angels recognise the standard YC language and do not need to re-read every clause.

Common mistakes founders make

A SAFE is simple, but a few errors come up again and again.

• Stacking too many SAFEs without tracking dilution. Each one converts into shares later. Lose track of caps and amounts and you can be surprised by how much you gave away. Model your post-money cap table as you go, exactly like the example above.
• Setting a cap you regret. A very low cap raises cash fast but can transfer a large slice of the company. Think about the ownership outcome, not just the headline number.
• Mixing pre-money and post-money SAFEs. They calculate ownership differently. Stick to the current post-money standard so the maths stays consistent.
• Editing the legal text yourself. The YC SAFE is designed to be used as written, with only the blanks filled. Hand-editing clauses can undo the standardisation that makes it fast and trusted.
• Skipping legal review. The template is standard, but your situation may not be. A short review with a startup lawyer is cheap insurance.

An honest limitation

A SAFE is the right tool for fast, early, US-style equity raises, and Plox is the right tool for sharing those documents securely. Neither is a fit for everything. A SAFE assumes a future priced round will eventually convert it; if you are running a revenue-based or debt financing, or raising outside a Delaware C-corp structure where investors expect different paperwork, a SAFE may not apply and a convertible note or a local instrument can be the better choice. And Plox is a secure sharing and data room platform, not an e-signature or cap-table product: pair it with a dedicated signing tool and a cap-table tool for the parts it does not cover.

To be fair to those tools, a purpose-built e-signature product handles the legal signing flow, audit trail, and counterparty signing experience better than a generic sharing tool, and a dedicated cap-table product models conversions with more precision than a spreadsheet. Use each for what it does best.

Share your SAFE and deck securely

Once your terms are set, getting the documents in front of investors quickly matters. Instead of scattering attachments across email threads, share a single secure, trackable link.

With Plox you can:

• Send your pitch deck and SAFE as one secure link and control who can open them, with passcodes, email verification, and link expiry.
• See page-by-page analytics on who viewed what, how long they spent, and which slides held attention, so you know when to follow up. Read more on how analytics turn opens into signals.
• Keep all fundraising documents in a virtual data room so investors find everything in one organised place.

For more on the wider workflow, see our guides on how to share a pitch deck with investors, the startup valuation calculator for sense-checking your cap, and what happens after raising funding once the SAFEs are signed. If you are running a structured raise, our guide to keeping investors in the loop helps after the cheque clears.

Plox has a genuine free plan and flat, self-serve pricing, so you can start sharing securely without a sales call. Start free, share your first SAFE and deck as a trackable link today, and see exactly who is reading.

Frequently asked questions

What is a YC SAFE template?

The YC SAFE template is Y Combinator's free, standardised legal document for raising early-stage money. You fill in the company name, investor name, amount, and chosen terms, then both parties sign. It lets a startup raise now for equity later without setting a valuation today. Download it from ycombinator.com/documents.

Is a SAFE debt?

No. A SAFE is not debt. It has no maturity date, no interest, and nothing to repay. It is an agreement to issue equity in the future, and it converts into shares when you raise a priced round, with provisions for an exit or dissolution. That is the core difference from a convertible note.

What is a post-money SAFE?

A post-money SAFE is YC's current standard, where the valuation cap is measured after all the SAFE money is included but before the new priced round. This makes the investor's resulting ownership percentage easy to calculate, which the older pre-money SAFE did not, because it measured the cap before other new money.

What is the difference between a cap and a discount?

A valuation cap sets the maximum valuation at which the SAFE converts, giving early investors more shares if you later raise at a higher price. A discount converts the SAFE at a set percentage below the next round's price. Some SAFEs use both, and the investor takes whichever result gives them the better price.

Where do I download the official SAFE template?

Download it from Y Combinator's documents page at ycombinator.com/documents. Use the current post-money version and pick the specific variant you need. Avoid copies from blogs or old deals, since template versions change over time and an outdated SAFE can cause problems when it converts.

Do I need a lawyer for a SAFE?

The SAFE is standard and designed to be simple, but this guide is general information, not legal advice. Your circumstances may differ, so it is sensible to have a startup lawyer review the terms, especially the valuation cap, discount, and any side letters, before you and your investor sign.

How should I share my SAFE and pitch deck with investors?

Share them as a single secure, trackable link rather than email attachments. With Plox you can send your pitch deck and SAFE securely, control access, and see page-by-page analytics on who engaged, so you can follow up at the right time.