Deal Mechanics
SAFE Conversion Simulator
Understand the "ticking time bomb" of early fundraising. See how a Valuation Cap and Discount Rate determine the price your early investors pay later.
Note Terms
Future Scenario
Interest Accrued
+$45,000
Total Converting
$545,000
Conversion Logic Check
Option A: Cap
$5.0M
Valuation Cap
Option B: Discount
$8.0M
$10.0M minus 20%
Result: The Note converts at $5.0M|50.0% discount on Series A.
Note Ownership
10.90%
Equity stake at Series A
Investor Return
2.2x
Paper multiplier on Principal
Recaport Note Analysis
At a Series A valuation of $10.0M:Cap Triggered. Your growth exceeded the cap. Investors are getting a 50.0% discount off the round price. Plus, they get $45.0k in "free" equity from interest.
How SAFEs Work
- The Trigger: SAFEs don't turn into equity immediately. They wait until your next "Priced Round" (e.g., Series A).
- The Logic: The investor gets the better deal (lower price) between the Valuation Cap OR the Discounted Price.
- The Risk: If your startup grows massively (high Series A valuation), the Cap protects the investor, giving them a huge discount compared to new investors.
Cap vs. Discount
This calculator compares both scenarios automatically:
- Cap Scenario: Used if your company value explodes. Investors convert at the Cap price.
- Discount Scenario: Used if your company grows modestly. Investors get a simple % off the new price.