What is a SAFE?
A Simple Agreement for Future Equity: money now for shares later, usually converting at the next priced round, typically with a valuation cap, a discount or both. Y Combinator publishes the standard forms.
Cap, discount, pro rata and MFN, in plain English
The handful of terms that decide what an investor pays for a share of your company, with market figures and their sources. Clauseworthy is not a law firm and does not give legal advice.
Model your SAFEsOwnership before and at a priced round.Check a SAFE you were sentCompared with YC's post-money SAFE.
The terms, one by one.
Valuation cap
The highest company value at which a SAFE converts. On a post-money SAFE, the cap fixes the investor's share directly: the amount divided by the cap. On Carta, the median cap on SAFEs larger than $2.5M was $35,000,000 in Q2 2026 (Carta).
Discount
A percentage off the price the next round's investors pay. Y Combinator says discounts are commonly 10–20% (YC); on Carta, 25% of post-money SAFEs issued in the first half of 2026 included one (Carta).
Pro rata rights
The right to buy into the next round to keep the same percentage. On YC's SAFE it lives in a separate side letter, not in the SAFE itself.
Most-favoured nation (MFN)
If the company later issues a SAFE on better terms, the MFN holder may take those terms. YC publishes an uncapped MFN form for exactly this.
Post-money or pre-money
A post-money SAFE measures the investor's share after all SAFEs convert, so each new SAFE dilutes the founders, not the earlier SAFE holders. Y Combinator's current forms are all post-money.
Where caps sit
| Round size | Median cap |
|---|---|
| Under $250k | about $10M |
| $250k–$499k | about $12M |
| $500k–$999k | about $12.5M |
| $1M–$2.4M | about $18M |
| $2.5M and up | about $35M |
Approximate: read from the chart in Carta, “In the pre-seed market, valuation caps on new SAFEs keep getting bigger” (as of Q2 2026; SAFEs issued on Carta only). On the spread above the median, Carta writes: “Across the past six quarters combined, 90th percentile valuation caps have been between 2.5x and 3.5x higher than medians, depending on the size of the SAFE.”
Before a priced round.
What this does not do
- Market figures describe other companies' rounds; they do not say what your cap should be.
- A term sheet for a priced round has many more terms (liquidation preference, board, protective provisions) that these tools do not check.
- Side letters can change the economics; read them with the SAFE.
Questions about term sheets
Is a cap and a discount together standard?
It is a minority of SAFEs: on Carta in the first half of 2026, most post-money SAFEs had a cap only. YC no longer publishes a combined cap-and-discount form.