SAFE Agreement Template: Free Y Combinator Post-Money SAFE With Each Clause in Plain English

A SAFE (Simple Agreement for Future Equity) lets an investor pay cash now in exchange for shares later, usually at the company's next priced round. Y Combinator's post-money SAFE is the standard version of this agreement. It sets the valuation cap after counting all SAFE money, so founder and investor can both work out the ownership being sold on the day the money arrives. This guide explains every section of the free YC SAFE agreement template in plain English and includes a worked dilution example you can rebuild in an Excel template.

What the Y Combinator Post-Money SAFE Agreement Template Actually Is

YC published the first SAFE in 2013 and changed it in 2018. The biggest change in 2018 was the switch to a post-money convertible security. According to YC's SAFE User Guide, the main benefit of the post-money form is that "the amount of ownership sold is immediately transparent and calculable for both the founder and the investor." The same guide warns that if the next round prices at or below the cap, the SAFEs can convert into more ownership than your estimate showed.

The form now dominates early-stage fundraising. Carta's State of Pre-Seed Q1 2025 report found that SAFEs made up 90% of pre-seed rounds on its platform and 82% of pre-seed capital, with convertible notes accounting for the rest. Carta's 2025 year-in-review put median post-money SAFE caps at about $10 million for rounds of $250,000 to $1 million, and about $15 million for rounds of $1 million to $2.5 million.

YC also signs this paper itself. Its standard deal puts $500,000 into every company through two SAFEs, with $125,000 on a post-money SAFE for 7%, and $375,000 on an uncapped MFN SAFE. YC first announced this structure in January 2022 in a post by then-president Geoff Ralston.

The template library has several versions:

Valuation cap, no discount: the default for most pre-seed rounds.
Discount, no cap: the investor buys at a percentage below the next round's price.
MFN, no cap and no discount: the investor automatically gets the best terms you later give anyone else.
Pro rata side letter: an optional separate document giving the investor a right to buy into the next round.

Takeaway. Pick the version before you open the document. If you are raising under $2.5 million in the US, the cap-only post-money SAFE is the market default. Changing the form will slow every investor's legal review.

SAFE Agreement Template Section 1: The Conversion Events, Clause by Clause

Section 1 sets out what happens to the investor's money in each possible future. You can read the rest of the document as support for this section.

1(a) Equity Financing

When you close a priced round, the SAFE converts into preferred stock. The conversion price is the lower of two figures, the cap price, which is the Post-Money Valuation Cap divided by Company Capitalization, or the discount price where your version has a discount. In plain English, the investor gets the cheaper price. If your Series Seed is priced at $1.50 per share and the cap works out to $0.90, the SAFE holder converts at $0.90. The investor receives "Safe Preferred Stock", which has the same rights as the new round's preferred stock but uses the SAFE's lower price for liquidation preference. This stops the SAFE holder from getting a preference larger than the cash they actually paid.

1(b) Liquidity Event

If the company is sold or goes public before a priced round, the investor gets whichever is larger of the Cash-Out Amount (their purchase amount returned) or the Conversion Amount (the value of the shares their money would have bought at the cap). A $250,000 SAFE at a $10 million cap in a $50 million acquisition converts into 2.5% and is worth about $1.25 million, so the investor takes conversion. In a $6 million acquihire, they take their $250,000 back.

1(c) Dissolution Event

If you shut down, the investor is entitled only to the Cash-Out Amount, paid before common stockholders get anything. A Dissolution Event covers a voluntary end of operations, an assignment for the benefit of creditors, or any other winding up, as a line-by-line breakdown of the YC text shows.

1(d) Liquidation Priority

The SAFE says it is "intended to operate like standard non-participating Preferred Stock." It ranks below debt and creditor claims (convertible notes included), equal with other SAFEs and preferred stock, and ahead of common stock. Founders holding common stock are paid last.

1(e) Termination

The SAFE ends automatically once shares are issued on conversion or the cash owed under 1(b) or 1(c) is paid or set aside. It has no maturity date and no interest. That is the biggest practical difference from a convertible note.

Takeaway. Before signing, model three outcomes, a priced round, an early sale and a shutdown. Write down what each investor receives in each one so that nobody is surprised at closing.

Section 2 Definitions: Where the Dilution Math Lives

Most founders skim the definitions. That is a mistake, because three of them decide how much of the company you keep.

Post-Money Valuation Cap: the number written on page one. Under the post-money structure, the investor's ownership at the cap equals the purchase amount divided by the cap. $500,000 on a $10 million cap buys 5%, before any dilution from the priced round.
Company Capitalization: the denominator in the conversion price. It counts issued shares, outstanding and promised options, the unissued option pool, and all converting securities, including every other SAFE. Because every SAFE sits in the denominator, each new SAFE you sign dilutes the founders and earlier common holders. It does not dilute the SAFE holders already on your cap table.
Liquidity Event and Change of Control: a sale of more than 50% of voting power, a sale of substantially all assets, or an IPO. Read this definition with 1(b) above.
Subsequent Convertible Securities: this matters in MFN SAFEs. It covers later SAFEs and notes, but excludes employee options and certain lender, supplier and strategic partnership instruments.

Here is a worked example. You raise $1 million from four angels on a $10 million post-money cap, which is 10% total. Two months later you add $1 million from a seed fund on a $12 million cap, which is about 8.3%. Founders and the option pool have now sold about 18.3% before the priced round dilutes everyone again. Post-money SAFEs stack directly onto the founders, so in a spreadsheet model the founder line should drop by exactly the sum of each check divided by its cap.

Takeaway. Keep a running SAFE register with four columns, investor, amount, cap, and implied ownership (amount divided by cap). Add up the last column every time you sign. Once it passes 20% to 25% before a seed round, slow down.

Sections 3 to 5: MFN, Representations and the Miscellaneous Fine Print

The MFN Amendment Provision

The MFN version has no cap. Instead, if you issue Subsequent Convertible Securities with better terms before the SAFE converts, you must notify the holder, and they can choose to adopt those terms. YC's deal page gives an example. If the next SAFEs carry a $15 million post-money cap, YC's $375,000 MFN SAFE converts at that cap into $375,000 divided by $15,000,000, which is 2.5% of the company. Ralston's 2022 announcement says the MFN picks up the lowest-cap SAFE (or other most favourable terms) issued between the start of the batch and the next equity round. If you set your first post-batch cap low, you give YC more of the company too.

Company Representations

The company confirms that it is duly organised and in good standing, that the SAFE is authorised, that signing it breaches no other contract or law, that no third-party consent is needed, and that it owns or can use its intellectual property. If you have not completed founder IP assignments, fix that before you sign. Representation 3(e) assumes they are done.

Investor Representations

The investor confirms they have authority to sign and are an accredited investor. The commentary cited above lists the usual US tests: net worth over $1 million excluding a primary residence, or income over $200,000 (or $300,000 joint) in each of the last two years. Collect this confirmation in writing from every angel.

Miscellaneous (Section 5)

5(a) Amendments: changes need written consent from the company and either the investor or a majority-in-interest of SAFEs with the same terms. You can amend a whole SAFE series with one majority vote, without chasing every angel.
5(c) No shareholder rights: holders cannot vote and receive no dividends until conversion, apart from a pass-through if common stock ever pays a dividend.
5(d) Transfers: the SAFE cannot be transferred without consent, except to the investor's affiliates or to funds under common control.
5(f) Governing law: you fill in the state. This clause chooses which law applies and does not choose a court.

Takeaway. Put every negotiated extra, such as pro rata rights, information rights or board observer seats, in a side letter. Keep the SAFE text unedited so that investors' counsel can compare it against the YC original in minutes.

How to Fill Out the Free YC SAFE Agreement Template Step by Step

The template has only a few blanks. Most errors come from careless entries, so follow this order.

Download the right version (cap only, discount only, or MFN) from YC's documents page. Keep the original file untouched for comparison.
Enter the company's exact legal name and state of incorporation as they appear on the certificate of incorporation.
Enter the Purchase Amount and the Date of Safe. The date should match when the money arrives, which matters when you count which SAFEs fall inside an MFN window.
Enter the Post-Money Valuation Cap (or the discount rate, stated as 100% minus the discount, so a 20% discount is written as 80%).
Choose the governing law state. For a Delaware C-corp, most counsel pick Delaware.
Attach any side letters (pro rata, MFN, information rights) as separate documents.
Get board approval by written consent before or at signing. Representation 3(b) states that the SAFE is authorised.
Update the cap table and SAFE register on the day you receive the money, using the implied ownership calculation from Section 2.
Re-run the conversion model at three priced-round valuations: below the cap, at the cap, and at twice the cap.

Here is a step-3 example from the YC deal. YC's $125,000 for 7% implies a post-money cap of about $1.79 million. If you then raise $1.5 million from angels on a $15 million cap (10%), the MFN SAFE adds 2.5%, and founders have sold 19.5% before the seed round. Run that calculation before you accept the batch, so you know your starting position.

Takeaway. The legal document takes about 20 minutes to fill in. Most of the work is the cap-table spreadsheet behind it, so build that first.

Why a Ready-Made SAFE Template and Model Saves You Money

The YC post-money SAFE is a free download and is accepted almost everywhere. That consistency is the reason to use it unchanged. Investors' lawyers recognise it, Carta tracks it as the default instrument, and every term that matters fits on one page. The risk sits outside the document, in the running total of caps and checks you sign across several months. Founders who have three SAFE tranches, an MFN and a pool top-up still in a notes app usually find out their real ownership from the lead investor's term sheet.

Pair the YC SAFE agreement template with a working SAFE conversion spreadsheet before you send it to your first angel. The spreadsheet should hold the purchase amount, the cap, the implied ownership, the MFN triggers and a priced-round conversion waterfall. A pre-built Excel template with this logic already linked lets you test a new check in seconds and walk into seed negotiations knowing your fully diluted position. This guide is a practical walkthrough and does not replace advice from your company counsel.