A SAFE is fast, cheap and does not force a valuation conversation you are not ready to have. Those three facts explain why almost every Nigerian pre-seed round now closes on one. None of them tell you what the instrument costs when it converts.
The cap is a price, not a ceiling
Founders read the valuation cap as protection against overpaying investors. Investors read it as the price they have already agreed. When your priced round comes in above the cap — which is the entire point of raising again — the earlier money converts at the cap, not at the round price. The gap between those two numbers is dilution you agreed to eighteen months earlier, in a document you signed in an afternoon.
By the time the cap bites, the founders have usually forgotten it exists. The cap table has not.
Stack three or four SAFEs at different caps and the conversion becomes genuinely difficult to model in your head. We have seen founding teams discover, at term sheet stage, that their combined pre-seed converts to 31% rather than the 18% they carried in their mental model.
Post-money is not a formatting choice
The shift from pre-money to post-money SAFEs moved the dilution risk of every subsequent SAFE from the investor onto the founder. Under a post-money SAFE, the investor's percentage is locked in at signature and every later SAFE dilutes you alone. If a term sheet says post-money and the round is likely to have several tranches, that single word is worth negotiating harder than the cap itself.
What we tell founders to do
Model the conversion before you sign, at three exit valuations, with every outstanding instrument in the sheet. Keep the number of distinct caps low — two is manageable, five is not. And put a conversion schedule in the data room from day one, so the round you are raising is not also an archaeology project.