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SAFE / Note Cap-Table Impact Memo
A plain-language memo that shows founders exactly how their SAFEs and notes will convert and dilute the cap table at the next round, turning the scary math into a readable summary.
What is a SAFE / Note Cap-Table Impact Memo?
A SAFE / Note Cap-Table Impact Memo is a plain-language memo that shows founders exactly how their SAFEs and notes will convert and dilute the cap table at the next round. It turns the scary math into a readable summary.
Founders who've raised on SAFEs/notes and can't picture what they'll actually own after the next priced round. This produces a written, shareable impact memo (and a worked example) so there are no surprises at conversion, the single most misunderstood part of early fundraising.
SAFE / Note Cap-Table Impact Memo template, current for 2026
Explains the post-money-cap 'ownership is fixed at signing' reality, the option-pool-shuffle dilution trap, and how stacked SAFEs compound, none of which the older startup tools surface in plain language. Includes a fill-in worked example and a QSBS/holding-period flag.
How HDAi does this differently
Unlike a static form, HDAi runs a guided interview and assembles your SAFE / Note Cap-Table Impact Memo as you answer. When you want it finished, a licensed Hart David Carson attorney reviews it and tailors it to your facts before you sign. The interview and the first draft are automated. The judgment belongs to an attorney.
What you’ll be asked
A short interview in plain language that asks only what this document needs.
- What is the company's full legal name? Names the issuer whose cap table this memo analyzes. Use the exact legal name (e.g., "Acme Labs, Inc.").
- What type of entity is the company? SAFEs and most convertible notes assume a C-corp (they convert into preferred stock). This also drives the QSBS / Section 1202 analysis, which is only available for C-corporation stock.
- As of what date is this memo prepared? Fixes the date of the analysis. Cap tables move constantly, so a memo is only as good as its date.
- Who is this memo prepared for? Usually the founder(s) or the board. Naming the audience frames the plain-language tone and the privilege posture.
- Who is preparing this memo? Typically the company's counsel or finance lead. Appears in the header and signature block.
- How many shares of common stock are outstanding today (pre-round, pre-conversion)? The founder/employee common base. This is the anchor for every dilution percentage in the memo.
- Is there any preferred stock already outstanding (e.g., from a prior priced round)? If a prior priced round exists, its shares sit in the pre-money base and change the math.
- How many shares of preferred stock are already outstanding? Prior-round preferred that sits in the fully-diluted pre-money base.
- How many options/RSUs are already granted and outstanding? Granted equity awards. These are already dilutive and typically counted in the fully-diluted base.
- How many shares remain unissued (available) in the existing option pool? The unused reserve. Investors often want this counted pre-money, which shifts dilution onto founders.
- Which convertible instruments does the company have outstanding? Tells the memo which conversion mechanics to explain. You can select more than one.
- What is the total dollar amount invested across all SAFEs? The aggregate SAFE purchase amount. This is the numerator that converts into shares at the next round.
- Do the SAFEs use a valuation cap, a discount, both, or neither? The cap and discount are the two levers that decide the SAFE conversion price. Most SAFEs use both, whichever is more favorable to the investor.
- What is the SAFE valuation cap? The maximum valuation at which the SAFE converts. A lower cap means the SAFE investor gets more shares. Enter the most common cap if they vary.
- What is the SAFE discount rate (percent off the round price)? The percentage discount the SAFE gets versus new-money investors. Enter 20 for a 20% discount (i.e., an 80% conversion multiplier).
- What is the total principal amount across all convertible notes? The aggregate principal the notes will convert. Interest accrues on top of this.
- What annual interest rate do the notes accrue? Note interest compounds the conversion amount. Enter 6 for 6% per year. Interest converts to equity alongside principal.
- What is the estimated accrued interest on the notes at the projected conversion date? The interest built up by the time the notes convert. Add it to principal to get the total converting amount.
- What is the convertible notes' valuation cap? The cap that sets the notes' best-case conversion price, like a SAFE cap.
- What discount do the notes convert at (percent)? The notes' discount to the round price. Enter 20 for 20% off.
- When do the convertible notes mature? If the round doesn't happen before maturity, the notes come due or convert on their default terms. A near maturity is a risk flag.
- Is the next round a real term sheet or a planning assumption? Frames the numbers as projections or as signed terms, and sets the disclaimer tone.
- What is the next round called? E.g., "Series A" or "Series Seed." Used as a label throughout the memo.
- How much new money will be raised in the next round? The fresh capital from new investors, separate from the converting SAFEs/notes.
- What is the pre-money valuation for the next round? The negotiated value of the company before the new money goes in. This drives the round share price.
- Is the pre-money valuation spread over the issued base or the fully-diluted base? Dividing the pre-money by the issued (non-fully-diluted) share count rather than the fully-diluted count materially changes the round price and every downstream percentage. This is a negotiated term; confirm it against the term sheet.
- Will the instruments convert into the same security as the new investors, or a separate shadow series? SAFEs and notes with a cap or discount often convert into a separate 'shadow' sub-series of preferred priced off the cap/discount, rather than the same shares the new-money investors buy. This affects share counts and per-share rights.
- When was the founder/early-holder stock originally issued (for QSBS timing)? Section 1202 QSBS generally requires a five-year holding period from original issuance. Converted SAFE/note shares start their own clock at conversion. Provide the original issuance date so tax counsel can assess the holding period.
- How will the option pool be handled in the round? A pre-money ("top-up") pool dilutes existing holders including SAFE/note holders; a post-money pool dilutes everyone. This is often the hidden dilution founders miss.
- What target option pool size (as a % of post-round fully-diluted) does the round assume? Investors typically require a refreshed pool, often 10 to 15% post-money. Bigger pool means more founder dilution.
- Do any SAFEs or notes carry a "most favored nation" (MFN) clause? An MFN lets an early holder adopt better terms later granted to others. It can quietly worsen dilution and should be flagged.
- Do any holders have pro-rata / participation rights in the next round? Pro-rata rights let holders buy more to maintain ownership, adding to the round size and the cap-table complexity.
- If caps and discounts vary, list each instrument's cap and discount (optional). Optional. List each SAFE or note with its own cap and discount so the memo records the terms of record for reconciliation, for example 'SAFE 1: $6M cap, no discount. SAFE 2: $10M cap, 20% discount. Note A: $12M cap, 20% discount, 6% interest.'
- Any special terms, side letters, or facts the memo should call out? Free text for anything unusual, such as variable caps, differing discounts, MFN mechanics, side letters, or founder concerns to address.
- Which attorney should review this draft before it is relied upon? This is a draft for licensed-attorney review. Naming the reviewer sets expectations and preserves the privilege posture.
Frequently asked
About the SAFE / Note Cap-Table Impact Memo and how HDAi works.
What is a SAFE / Note Cap-Table Impact Memo? +
A SAFE / Note Cap-Table Impact Memo is a plain-language memo that shows founders exactly how their SAFEs and notes will convert and dilute the cap table at the next round, turning the scary math into a readable summary. It is for founders who've raised on SAFEs/notes and can't picture what they'll actually own after the next priced round. The memo is written and shareable, comes with a worked example, and leaves no surprises at conversion, the single most misunderstood part of early fundraising.
Is HDAi's SAFE / Note Cap-Table Impact Memo legally binding? +
The SAFE / Note Cap-Table Impact Memo HDAi generates is a professionally drafted document that becomes binding once it is completed, reviewed, and properly signed. If you want a licensed Hart David Carson attorney to finish it, book a planning call. The firm's flat-fee packages, the Illinois Family Plan and Company Launch, cover the most common needs; for any other draft, an Illinois attorney will tell you on the call what finishing it would involve.
Do I need a lawyer to use this SAFE / Note Cap-Table Impact Memo? +
You can generate and download the SAFE / Note Cap-Table Impact Memo in minutes, free of charge. A licensed Hart David Carson attorney can then review it and tailor it to your facts before you sign, which is the part no template can do.
What makes this SAFE / Note Cap-Table Impact Memo current for 2026? +
Explains the post-money-cap 'ownership is fixed at signing' reality, the option-pool-shuffle dilution trap, and how stacked SAFEs compound, none of which the older startup tools surface in plain language. Includes a fill-in worked example and a QSBS/holding-period flag.
How long does the SAFE / Note Cap-Table Impact Memo take? +
Estimated time about 18 min (35 questions), depending on how much you already know. The document assembles as you answer. Export it as PDF or Word, or send it to a Hart David Carson attorney for review.
Does this SAFE / Note Cap-Table Impact Memo work in my state? +
HDAi's interview is state-aware. If you ask an attorney to finish the draft, a licensed Hart David Carson attorney confirms it against your state's requirements before you rely on it. Validity and required formalities vary by state.