SAFE Cap Discount Comparison
Compare SAFE cap and discount conversion prices using supplied capitalization assumptions.
Description
A SAFE conversion scenario can compare a valuation-cap price with a discounted round price.
A SAFE conversion scenario can compare a valuation-cap price with a discounted round price. Capitalization definitions determine the cap-derived price.1
Compare SAFE cap and discount conversion prices using supplied capitalization assumptions.
When to use SAFE Cap Discount Comparison
Use this for the following task: Compare SAFE cap and discount conversion prices using supplied capitalization assumptions.
Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.
How to use SAFE Cap Discount Comparison and understand its results
- Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.
- Enter investment, roundPrice, discountFraction, valuationCap, capitalizationShares using the field table, then run the tool.
- Read capPrice, discountPrice, selectedPrice, convertedShares. Interpret flags, units, ordering and placeholder values using the rules below.
- Review any reported issue or failed check, correct the supplied values when appropriate, and verify the result in its intended context.
| Input field | Meaning | Value type and bounds | Requirement |
|---|---|---|---|
| investment | Investment | number | Required |
| roundPrice | Round price | number | Required |
| discountFraction | Discount fraction | number | Required |
| valuationCap | Valuation cap | number | Required |
| capitalizationShares | Capitalization shares | number | Required |
Supply positive investment, round price, cap and capitalization shares with discount in [0,1). Select the lower price and divide the investment by it.2
capPrice=cap/shares; discountPrice=roundPrice(1−discount); selected=min(capPrice,discountPrice) This summarizes the declared operation. Units, indexing, inclusivity and exceptional cases are explained in the surrounding text.
| Output field | Meaning | Value type |
|---|---|---|
| capPrice | Cap price | number |
| discountPrice | Discount price | number |
| selectedPrice | Selected price | number |
| convertedShares | Converted shares | number |
{
"input": {
"investment": 1000,
"roundPrice": 2,
"discountFraction": 0.2,
"valuationCap": 1000,
"capitalizationShares": 1000
},
"output": {
"capPrice": 1,
"discountPrice": 1.6,
"selectedPrice": 1,
"convertedShares": 1000
}
}Limitations and assumptions
This assumes both pricing mechanisms apply as supplied. It does not interpret an actual SAFE contract or solve interacting instruments.
These outputs describe the supplied scenario; accounting definitions, capitalization terms and time periods must match the intended use. Malformed requests produce input errors. A successfully evaluated request can still contain false flags, empty result lists or a result outside the supplied threshold; those outcomes have the meanings stated above.
Alternative or Complementary methods
Choose Postmoney SAFE Shares for this operation: Solve one cap-only post-money SAFE share count before new-money financing dilution. For a complementary task, use Convertible Note Conversion for this operation: Convert simple-interest note principal plus interest at the lower cap or discount price.
Further background: SAFE financing documents and background.
References
-
SAFE financing documents and background — Y Combinator
-
SAFE Cap Discount Comparison — tool.io
Similar or alternative tools
- Postmoney SAFE Shares
Solve one cap-only post-money SAFE share count before new-money financing dilution.
- Convertible Note Conversion
Convert simple-interest note principal plus interest at the lower cap or discount price.