Writing as of 2026, it’s abundantly clear the Post-Money SAFE has become the dominant financing structure for startups’ first major funding round. As a law firm that works in every major startup ecosystem, it’s rare these days that we see a financing under $3-4 million (in funds raised) that isn’t some form of SAFE structure. Above that size, we see preferred stock (priced seed) more often, although the threshold is a bit higher in the Bay Area.  

That said, there are nuances to SAFEs that founders, especially first-time founders, need to be aware of to ensure they aren’t making very costly mistakes for their cap table and company. The SAFE (including the Post-Money SAFE) is not a singular document but a category of financing instrument, with different varieties used in the market.

Some quick history.

Before the Post-Money SAFE there was the Pre-Money SAFE, the original instrument released by Y Combinator to evolve past the convertible note, which at the time was the most common instrument for pre-seed/seed funding.

The Pre-Money SAFE fell out of favor because, as startups started “stacking” SAFE rounds, it became near impossible for investors to understand what they were actually buying on the date of their closing. The math was ambiguous. So YC released the Post-Money SAFE, with much more straightforward math for investors to know what percentage of the cap table they were purchasing.

Clarity and transparency are good. Removing the math ambiguity was helpful for making pre-seed/seed cap table math much simpler.

If you stack Post-Money SAFEs, the earlier SAFEs don’t dilute. This means founders dilute more.

But the specific way YC chose to structure the Post-Money SAFE (in our opinion) over-corrected the issue. After making it easy for investors to know exactly what percentage of the cap table they were buying at closing, YC went further by having that percentage not dilute if the company raises subsequent “stacked” SAFE rounds.

With simple numbers, imagine you are raising a $2 million SAFE round on a $20 million Post-Money Valuation Cap. SAFE investors are cumulatively buying 10% (2/20) of the cap table. Simple and fair enough.

Now imagine 12-18 months later, the startup is doing well, but it’s not the right time to do a priced round. You raise an additional $3 million at a $30 million post-money cap. These new investors are also cumulatively buying 10% on the day of their closing.

But what about the first SAFE round at the lower valuation cap? Are they being diluted by the up-round? If you’re using YC’s default post-money cap structure, the answer is no. No SAFEs dilute until their conversion, even if subsequent SAFE rounds are up-rounds.

If your second round had been a preferred stock round, the first SAFEs would’ve converted and been diluted by the new money. If you had been using pre-money SAFEs, or convertible notes, the first SAFEs also would’ve been diluted. It’s only with Post-Money SAFEs that nothing dilutes until the SAFEs convert.

Thus, the Post-Money SAFE structure is extra dilutive of founders, and extra costly to stack. If you want to dig into the math, here is a public Google Sheet.

SAFEs can be tweaked and negotiated. They often are.

Some founders accept the harsh Post-Money SAFE math. Others modify (it’s very easy to do) the SAFE terms to remove the harsh anti-dilutive element.

The core point we want founders to understand is SAFEs are often negotiable. There is no universal “standard” SAFE instrument. On top of pre-money v. post-money, there’s different ways to structure the post-money cap. There are also uncapped discounted SAFEs, SAFEs with a cap and a discount, and also SAFEs with MFNs (most-favored nations).

If you already have post-money SAFEs on your cap table, there are even ways to ensure you aren’t giving away more dilution than you have to, such as by shrinking your unused option pool.

Yes, the Post-Money SAFE as a category has come to dominate startups’ first funding. But that category includes variation that knowledgeable founders can leverage to avoid unnecessary dilution.

Investors will sometimes claim YC’s base template Post-Money SAFE is a universal “standard,” but that’s simply not true. Overstating the degree of standardization in startup finance is a common way for first-time founders to get misled into bad decisions.

Ensure you are working with trusted advisors who understand the full playing field of possibilities and let you decide – with eyes wide open – what’s best for your company.