Post-money SAFEs are now the standard: Carta’s Winter 2025 State of Seed report shows 92% of pre-seed rounds use SAFEs (up from 54% in 2019), with 87% structured as post-money SAFEs. Plus, Y Combinator’s templates are a Google search away.
Yet VCs still encounter founders who lose majority control earlier, face down rounds later, and demotivate teams through unexpected dilution. The real gap could cost founders $200M+ in leaked equity annually. The issue is strategic comprehension, particularly how option pools carved from pre-money valuations and stacked SAFEs compound across multiple rounds
We spoke to six VCs and operators for their takes. Here’s why the gap persists, and the equity math founders are missing.
The core knowledge gap
Carl Niedbala, co-founder and COO at Founder Shield, which supports startups from seed through IPO with a full suite of insurance and risk advisory services, estimates that “the percentage of founders who genuinely understand the difference between pre-money and post-money when negotiating a term sheet likely falls below 50%, we’re talking more like 20% to 40%.”
He clarifies that most founders can recite definitions, but few grasp “how the post-money calculation dictates ownership dilution.”
George Damouny, Partner at Plug and Play Ventures, sees higher competence in hubs: “60-70% of tech founders in Silicon Valley and NYC materially know and understand the difference between pre and post-money. The companies outside of the U.S. probably have very little to no knowledge of the differences and how they can materially affect their company’s future outcome”
P.R. Yu, Founder & Managing Partner at Yu Galaxy, pegs the figure even lower: “fewer than 10% of founders truly grasp the long-term implications of pre-money versus post-money valuations when they’re negotiating term sheets.” Yu warns that low early valuations create “painful dilution later and demotivate early shareholders,” while chasing high valuations risks down rounds.
The data backs them up. Carta found 1% of SAFEs last year were uncapped with no discount, a structure one investor called evidence that “at least 1 in 12 VC funds has no idea what’s doing.”
The option pool trap: From 56% to 49% ownership in one adjustment
The most consistent red flag across interviews: option pools “baked into” pre-money valuations. Steve Schlenker, Managing Partner at DN Capital, illustrates with a £20M pre-money valuation and a £5M raise.
Without the pool, the founder expects 56% ownership post-20% dilution. With a 10% pool carved out of pre-money, adjusted pre-money drops to £17.5M, leaving the founder at 49% and losing majority control.
Founders overlook this because the focus remains on headline pre-money numbers.
Schlenker elaborates further: “Using the example above, if a 10% option pool were created after the investment, the company’s post-money value would increase from £25 million to roughly £27.5 million. In that case, the investor’s £5 million would represent about 18% ownership, not 20%. Simply, the investor would end up with less of the company than they thought they were buying.”
Why post-money SAFEs haven’t fixed this
Nour Alnuaimi, Partner at Breega, sees founders grasp surface math but miss sustainability: “Most of them [founders] learn those fundamentals fairly quickly, especially once they go through their first funding round. Where founders do tend to struggle, however, is in determining how much to raise and at what valuation.”
Three root causes explain why 92% SAFE adoption hasn’t closed the knowledge gap. First, speed trumps diligence: founders prioritise closing rounds over modelling multiple scenarios.
Second, information asymmetry: investors live and breathe cap tables; founders assume “if 92% use post-money SAFEs, it must be simple.”
Third, templates aren’t tutorials. Y Combinator’s PDFs contain legal jargon rather than interactive explanations of how a $100K post-money SAFE at a $10M cap locks in exactly 1% ownership regardless of future raises.
What actually matters?
Alnuaimi emphasises the importance of market context: “Before going out to fundraise, I always recommend that founders take a hard look at their own metrics and investigate where the market is. Valuations have shifted dramatically. In 2020–21, revenue multiples went wild, a few extreme cases hit 100x and later on, some exceptional companies raised at 35x or 45x. Today, the market has corrected. A good Series A typically sits somewhere between 15x and 25x revenue.”
She adds, “So if you’re doing £1M in annual revenue, you’re likely looking at a £15–25M valuation. Understanding that context helps you answer two essential questions: How much do I actually need to reach my next milestone? And how much will the market realistically give me?”
Ramin Niroumand, Partner at Motive Ventures, agrees, “I often see founders over-optimising for the headline valuation and forgetting that this number is only one lever. I’d always advise thinking in dilution, not valuation. It’s better to own slightly less of a company that’s well-governed and aligned with investors than to hold a few extra percentage points and lose flexibility later. The smartest founders don’t chase valuations, they manage dilution and alignment.”
Lessons for founders
Experts recommend modelling 3 scenarios (base/optimistic/pessimistic), negotiating option pools post-money, using post-money SAFEs, and requesting upfront Series A conversion math from leads.
In the 2026 market, these steps preserve majority control and exit equity. Founders bridging these gaps turn knowledge into enduring wealth.
