Since early 2022, YC's standard deal has been $500,000 — but that money comes in two pieces with very different terms. Most founders sign it without fully understanding the second half. Here's the whole picture.
The two SAFEs
| Component | Amount | Instrument | Terms |
|---|---|---|---|
| Tranche 1 | $125,000 | Post-money SAFE | 7% of the company on a post-money basis |
| Tranche 2 | $375,000 | MFN (Most-Favored-Nation) SAFE | Uncapped; converts at the terms of your next priced round |
What the dilution actually looks like
The first $125K is straightforward: YC owns 7% the moment you sign. The second $375K is where founders get confused. Because it's an MFN SAFE with no cap, it converts at whatever cap you raise your next round at. So if you raise a $15M post-money seed, that $375K converts at a $15M cap and YC gets an additional 2.5%. If you raise at a $30M cap, it converts at $30M and YC gets only 1.25%.
In practice, total YC dilution at the time of your seed round is usually 8.5% to 9.5%.
| Seed post-money cap | MFN SAFE dilution | Total YC ownership |
|---|---|---|
| $10M | 3.75% | ~10.75% |
| $15M | 2.50% | ~9.50% |
| $20M | 1.88% | ~8.88% |
| $30M | 1.25% | ~8.25% |
Gotchas founders miss
- The 7% post-money SAFE means YC's stake stays at 7% if you raise more SAFEs before a priced round — those new SAFEs dilute you, not YC.
- Pro-rata: YC has the right to maintain its ownership in your next round. They almost always exercise it.
- The MFN auto-converts at your next priced round, even if you'd prefer to keep it outstanding longer.
- You don't have to take all $500K. You can sign just the $125K tranche if you want less dilution and more discipline.
Key takeaways
- YC's deal is $500K total: $125K for 7% post-money + $375K MFN SAFE.
- Real total dilution lands at ~8.5–9.5% after a typical seed.
- Raise at a higher seed cap and the MFN dilution shrinks meaningfully.
- YC's 7% is post-money, so additional pre-priced SAFEs dilute you, not them.