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How to Track SAFE Conversions at a Priced Round
How to track SAFE conversions is a close-and-open event, not a second wire. Y Combinator’s post-money SAFE (US standard since 2018) converts automatically when the company sells preferred stock in a priced round, an “Equity Financing.” The holder has no election, and the post-money form has no minimum raise (https://www.ycombinator.com/documents). The ledger from the wire lives in https://raziel.co/learn/safe-note-tracking. This page is the conversion packet: series, share count, Company Capitalization, and why the original cash date stays so IRR does not restart.
This is not legal, tax, or investment advice. Raziel Inc. does not provide it. Read the signed SAFE and the notice.
What to log from the conversion packet
Copy the event from the notice and the cap table you were sent. Do not re-model the round from a headline valuation. Attach the notice, any joinder, and that cap table. Write five fields on the new preferred row:
Event date. The Equity Financing close, not the week the PDF landed.
Series name. Safe Preferred Stock (often a shadow series such as Series A-2) or Standard Preferred Stock (the new-money series). YC’s SAFE User Guide: Safe Preferred has the same rights as Standard Preferred except liquidation amount, initial conversion price, and dividend amount are set off the Safe Price.
Share count. The number on the notice, not a napkin percentage from the cap.
Price used. Safe Price or the Standard Preferred price, and which rule produced it.
1x preference. If Safe Preferred issued, YC sets the aggregate preference equal to the Purchase Amount. If Standard Preferred issued, follow that series.
If you hold YC’s optional pro rata side letter and write a new check into the round, that is a separate cash row at the Standard Preferred price. Do not fold those shares into the conversion line. The side letter, when used, applies to this Equity Financing, not the round after.
Which price wins
YC’s post-money SAFE gives the holder the greater number of shares from two calculations. Write one outcome, not both.
Cap path, Safe Preferred. Safe Price is the Post-Money Valuation Cap divided by Company Capitalization. Shares equal the Purchase Amount divided by that Safe Price. YC User Guide Appendix II: a $200,000 SAFE at a $4 million post-money cap is 5 percent of Company Capitalization (588,235 shares at 11,764,705). Write the shadow series the charter named, the Safe Price, and a 1x preference equal to the Purchase Amount.
Round-price path, Standard Preferred. If the new-money price produces more shares than the cap path, the holder receives Standard Preferred at that price. YC: this happens when the Equity Financing’s pre-money valuation is lower than the Post-Money Valuation Cap, or close enough that the round price wins.
On a cap-and-discount form, whichever is most advantageous applies. A 20 percent discount converts at 20 percent below the Standard Preferred price (Discount Rate 80 percent on YC’s form). Always run both paths. If the notice’s share count disagrees with Purchase Amount divided by Post-Money Valuation Cap, the round-price path may have won, or the denominator includes convertibles you never logged. Flag it. Do not silently overwrite.
Post-money vs pre-money only as it changes the row
The only question at conversion is which denominator produced the share count you were sent. YC User Guide: both forms include outstanding Capital Stock, Outstanding Options, Promised Options, and the Unissued Option Pool. The original (pre-money) SAFE includes the Equity Financing’s option-pool increase and excludes other SAFEs and notes. The post-money SAFE includes those converting securities and excludes the pool increase adopted with the priced round.
A post-money implied percentage can be written before close. A pre-money share count cannot be finalized until the pool increase is known. If the company mixed both forms, run every outstanding SAFE. Copy Company Capitalization from the notice. Do not rebuild it from a pitch-deck fully diluted number.
Close the SAFE. Do not restart the cash date
A conversion is not a second investment. YC: the SAFE terminates when the holder has received stock. Close the SAFE ownership record (status converted, event date, pointer to the preferred row). Open preferred with series, share count, price used, and conversion date. Link both to the same cash history: purchase amount, currency, and the original wire date. Do not post a new outflow for the conversion shares. If you do, every IRR that uses that cash restarts at close. https://raziel.co/tools/moic-calculator still needs that original cash column. The only new cash at this close is a follow-on you actually wired.
Conversion-day checklist
Confirm the trigger is an Equity Financing. Liquidity and dissolution are different endings, logged on the SAFE note page.
Calculate cap path and discount path. Confirm the notice used the investor-favorable result.
Write series, share count, price used, and event date from the notice.
Close the SAFE row. Open preferred. Keep one cash line dated to the wire.
Attach the notice and the cap table you were sent.
If you have an MFN SAFE, YC: it adopts the best terms of a later SAFE in full. Record whether you elected. MFN is not a conversion trigger.
If a pro rata side letter funded a new check, add a separate cash row.
A workbook holds this if the links hold: SAFE closed, preferred open, one cash line, notice attached. It fails when the SAFE stays open, the preferred is entered as a fresh purchase, and IRR is computed from the round date.
Raziel’s startup tracker (https://raziel.co/products/startups) is the book those instruments already sit on (cash dates, documents, IRR, and unrealized gains). Raziel does not issue the shares and does not give legal advice. Investors: https://app.raziel.co/sign-up. Founders sending the notice: https://raziel.co/founders.
