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.

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.

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.

The post-money SAFE structure is clear and unambiguous, ensuring that investors know exactly what percentage of the company they own after their investment.

In a priced round, the SAFE converts into shares based on the pre-money valuation, which includes the increased options pool.

Understanding the mechanics of dilution and cap tables is essential for founders to navigate the fundraising process effectively. I hope this will not be anything new to you as we discuss raising money on post-money SAFEs and what happens as you hire people and issue equity to employees.

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.

The SAFE converts into shares when the company completes an equity financing, which can be a priced round or a series round.

It's crucial for founders to understand their dilution when raising money through SAFEs or convertible notes, as they may end up owning significantly less of the company than expected after a priced round.