Founders should avoid negotiating too hard on SAFE caps, as setting them too high can lead to selling more of the company than anticipated during a priced round.

When signing a SAFE, you might expect to own around 9% of the company based on an $800,000 investment at an $8 million cap, but this can be diluted by new money coming in during the priced round.

In rare cases where the priced round valuation is lower than the SAFE cap, SAFE investors may receive a better deal, converting at the lower price of the Series A round.

Many founders are shocked when investors agree to simple terms like signing a SAFE without demanding board seats or pro-rata rights, which contrasts sharply with their previous experiences.

Founders need to be aware that their ownership percentage can decrease significantly due to dilution from SAFEs and new equity rounds, so they should plan accordingly for future fundraising. The percentage of ownership for SAFE investors is based on the valuation cap in the SAFE, and if the priced round valuation is higher than the cap, they convert at the cap, receiving more shares for the same investment than Series A investors.

Negotiating a SAFE typically involves only two points: the amount of money the investor will contribute and the valuation cap.

Don't over-optimize for valuation caps when raising money on SAFEs, as the difference in ownership percentages may not be significant, and the focus should be on making the company successful instead.

The capped SAFE has a target valuation, which is the highest valuation at which the SAFE will convert into shares.

The SAFE investor's shares are calculated based on the conversion price, which is determined by the valuation cap if it's lower than the priced round valuation.