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 User Guide: when the company sells preferred stock in a priced round (an “Equity Financing”), outstanding SAFEs convert automatically and terminate. The holder has no election, and the post-money form has no minimum raise. The standing ledger — cash, terms, documents from the wire — lives in Raziel’s SAFE note tracking post. This page is the conversion packet: which series and share count to write, which Company Capitalization the form uses, and why the original cash date stays so IRR does not restart at close.

This is not legal, tax, or investment advice. Raziel Holdings, 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 cap table. Do not re-model the round from a headline valuation. Attach the notice, any joinder, and the cap table that shows your line. 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-1) or Standard Preferred Stock (the new-money series). YC’s User Guide, section B.1, is the naming rule.

• 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 liquidation preference, conversion price, and dividend rate off the Safe Price, and the aggregate preference equals 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, and which series you write

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. YC defines Safe Price as the Post-Money Valuation Cap divided by Company Capitalization. Shares of Safe Preferred equal the Purchase Amount divided by that Safe Price. YC’s 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 per share 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, and when the two are close enough that the round price wins. Write the new-money series and the round price.

On a cap-and-discount form, YC’s Appendix I: either the Post-Money Valuation Cap or the Discount Rate applies, whichever is most advantageous. Discount Rate is 100 minus the discount percent (20 percent off is a Discount Rate of 80 percent) applied to the Standard Preferred price. Log the method that won. The valuation caps and discounts post is the term-sheet walkthrough; this row stores the winner.

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’s User Guide (B.4): on both the original (pre-money) SAFE and the post-money SAFE, outstanding Capital Stock, Outstanding Options, Promised Options, and the Unissued Option Pool are in. The split is the rest. The original SAFE includes the Equity Financing’s option-pool increase and excludes other SAFEs, notes, and similar convertibles. The post-money SAFE does the opposite — it includes those converting securities and excludes the option-pool increase adopted as part of the priced round. A post-money implied percentage (Purchase Amount divided by Post-Money Valuation Cap) 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, YC’s practical tip (F.4) is that you have to run every outstanding SAFE.

Copy Company Capitalization from the notice or cap table. Do not rebuild it from a pitch-deck fully-diluted number. If the notice’s share count disagrees with your implied percentage, the round-price path may have won, or the denominator may include convertibles you never logged. Flag it. Do not silently overwrite.

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. Raziel’s IRR calculator is the same dated cash-flow math — conversion is a security change, not a cash event. The only new cash at this close is a follow-on you actually wired. That check gets its own date.

The event is a row change, not a new deal

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 investment tracker is the book those instruments already sit on — cash dates, documents, cap tables, IRR and unrealized gains. Raziel does not issue the shares and does not give legal advice. When the notice arrives, write the series the charter named and leave the wire date alone.