US baseline by round size (post-money, Carta Q2 2025): Under $250K: $7.5M $250K–$500K: $10M $500K–$1M: $10–12M $1M–$2.5M: ~$15M All US SAFEs (median, WSGR 2025): $20M*

SAFE Term Benchmarks: Pre-Seed, Mid-2026

Q: Discount

Range: Typically 0% or 20% — the market has essentially converged to a binary. In 2025 (WSGR): 72% of SAFEs were cap-only with no discount at all. When a discount does appear, it is 20% in 63% of convertible note deals and is the near-universal standard on SAFEs too.

Q: Post-Money vs Pre-Money SAFE

Post-money is the strong default. 81% of SAFEs in 2025 were post-money (WSGR). The YC template, updated in 2018, is post-money. This is what investors expect, and it's also what creates the 'SAFE stacking surprise' — each new post-money SAFE dilutes founders cumulatively, on top of prior SAFEs.

Q: MFN (Most Favored Nation)

Standard: Yes, effectively baseline now. YC offers the 'Uncapped MFN' as one of its three standard post-money SAFE templates, which has normalized the clause across the seed market. Roughly 30–40% of SAFEs include it formally, but angels writing early checks before a cap is set will almost always ask for MFN as their protection mechanism.

Q: Pro-Rata Rights

Standard: Not standard — selective. YC deliberately decouples pro-rata from the SAFE itself, offering it as an optional Pro Rata Side Letter. The NVCA model term sheet grants pro-rata only to 'major investors' — typically those holding 1–2% of fully diluted equity.

Q: Interest

None. This is a defining feature of SAFEs vs convertible notes. Standard, universal, non-negotiable. If an investor asks for interest, they want a convertible note, not a SAFE, and the conversation should reset around instrument choice.

Landon steele
Jul 12
7 min read

The goal is to raise the right amount, not the biggest amount. — The goal is to raise the right amount, with the right terms, not the biggest amount. Image from the TV Show "Silicon Valley"

I was recently asked by a founder to give some SAFE Term Benchmarks for Pre-Seed in Mid-2026, so that they could be prepared for upcoming discussions. I took up the challenge and did some research. (Mandatory disclaimer: This is not financial advice. It is a summary of recently published reports on the state of the market. It is for educational purposes only. Always have any deal reviewed by your own experts.)

SAFE Term Benchmarks: Pre-Seed, Mid-2026

Data sourced primarily from Wilson Sonsini Entrepreneurs Report FY2025, Carta State of Pre-Seed Q2 2025, Cooley Q1 2025 Venture Financing Report, and Causo H1 2026 Seed Deal Terms Report

Valuation Cap

US baseline by round size (post-money, Carta Q2 2025):

Round Size	Median SAFE Cap
Under $250K	$7.5M
$250K–$500K	$10M
$500K–$1M	$10–12M
$1M–$2.5M	~$15M
All US SAFEs (median, WSGR 2025)	$20M*

The WSGR $20M is skewed upward by AI-heavy and larger deals. The Carta round-size figures may be more representative.

AI premium: Carta's 2024 AI fundraising data shows median pre-money seed valuation for AI startups at $17.9M — 42% above non-AI medians. That premium held at Series A (+38%) and widened further at later stages. AI drug discovery specifically commands even more: PitchBook reports AI-native biotech companies fetching nearly a 100% valuation premium over biopharma broadly, driven by intense VC demand in that sub-vertical.

Canadian discount: Canadian seed rounds run 37–40% smaller than equivalent Tier-1 US cities, per BetaKit's analysis of structural funding gaps. Angel investment in Canada dropped 22.1% in 2025, and a March 2026 report quantified $66B in lost ecosystem value from Canada's structural seed funding gap. (Editorial comment: Sigh). European discount: European pre-seed cap medians run roughly 40% below US for reference (€2.4M / ~$3.5M CAD equivalent at pre-seed), though Canada is somewhat better-connected to US norms than Europe.

For Canadian companies in "hot" AI sectors:

The AI premium and the Canadian or European discount partly offset each other. Realistic range for a $500K–$1.5M raise: CAD $8M–$15M, sliding toward the higher end if the founder has prior credentials or US investors are participating. If the round is structured to attract Bay Area angels (a smart play for hot sectors), pricing in USD closer to US norms ($10M–$15M) is defensible and removes the "Canadian discount" discussion entirely.

For up to date info on recent round sizes, valuation benchmarks and the traction that investors expect at pre-seed and seed, see the Steele Startup Traction Matrix.

As usual, the best leverage in any negotiation of terms is to have multiple interested investors. I do understand that this is easier said than done, but your best shot is a structured and disciplined fundraising process. (Also, an evergreen reminder that higher valuations come with higher expectations. They are not always the best choice, especially in a frothy market. Cue this iconic scene from Silicon Valley).

Discount

Range: Typically 0% or 20% — the market has essentially converged to a binary. In 2025 (WSGR): 72% of SAFEs were cap-only with no discount at all. When a discount does appear, it is 20% in 63% of convertible note deals and is the near-universal standard on SAFEs too. The "discount-only" SAFE (no cap) has nearly disappeared — down from 14% in 2024 to just 7% in 2025. Cap + discount structures jumped from 8% to 21%, so that combination is gaining ground as investors push for both.

Practical guidance: Lead with cap-only. If an investor presses for a discount, 20% is the ceiling. "Better of cap or discount" is investor-friendly but acceptable for a meaningful lead check; avoid "better of" with smaller angels as it compounds dilution unpredictably.

Post-Money vs Pre-Money SAFE

Post-money is the strong default. 81% of SAFEs in 2025 were post-money (WSGR). The YC template, updated in 2018, is post-money. This is what investors expect, and it's also what creates the "SAFE stacking surprise" — each new post-money SAFE dilutes founders cumulatively, on top of prior SAFEs. Model this carefully before issuing multiple SAFEs at different caps.

MFN (Most Favored Nation)

Standard: Yes, effectively baseline now. YC offers the "Uncapped MFN" as one of its three standard post-money SAFE templates, which has normalized the clause across the seed market. Roughly 30–40% of SAFEs include it formally, but angels writing early checks before a cap is set will almost always ask for MFN as their protection mechanism.

How it works: If you later issue a SAFE with a lower cap or higher discount, MFN holders can automatically upgrade to those better terms. It's a check-size lever for early angels — they invest without forcing a valuation conversation, knowing they'll capture your eventual market price.

Founder watch-out: Push back on "single-trigger" MFN that resets on every future SAFE. Limit MFN to the next priced round only. Otherwise you're locked into a ratchet for the entire SAFE life.

Pro-Rata Rights

Standard: Not standard — selective. This is one of the most miscommunicated terms in early-stage fundraising.

YC deliberately decouples pro-rata from the SAFE itself, offering it as an optional Pro Rata Side Letter. The NVCA model term sheet grants pro-rata only to "major investors" — typically those holding 1–2% of fully diluted equity. That threshold excludes most angels writing $25K–$100K checks.

CRV explicitly warns that granting broad pro-rata rights complicates Series A fundraising — if 20 SAFE holders each have pro-rata on a $5M round, the lead VC can't get meaningful ownership. Grant pro-rata only to: (1) investors writing checks above a defined dollar floor ($100K–$250K+ depending on round size), (2) for the next round only, and (3) requiring affirmative exercise.

Interest

None. This is a defining feature of SAFEs vs convertible notes. Standard, universal, non-negotiable. If an investor asks for interest, they want a convertible note, not a SAFE, and the conversation should reset around instrument choice.

Additional Terms Worth Knowing

Information Rights: Included in ~30–40% of SAFEs via side letter. Quarterly investor updates + annual cap table is market. Monthly P&L for a $25K check is not. Resist broad information rights for small check-writers.
Board Observer Seats: Avoid at pre-seed unless the investor is a meaningful lead ($500K+). Observer seats slow future board meetings and create awkward dynamics at Series A. If pressed, limit to one seat for the single largest investor.
Qualified Financing Trigger: Defines what round size/type triggers SAFE conversion. Standard is a minimum raise amount (e.g., $1M+). Don't let a small bridge accidentally trigger conversion on unfavorable terms.
"Future Major Investor" Status: A side-letter back-door worth knowing. It grants a SAFE holder automatic "major investor" classification in the next priced round, triggering all associated rights (pro-rata, enhanced info rights, sometimes consent rights) that weren't in the SAFE itself. Flag and resist unless it's a legitimate lead.

Canadian-Specific Compliance

This is the part most founders skip and regret at Series A due diligence. Think Accounting's January 2026 Canadian SAFE guide is the most current practical Canadian source. Again, this is for education purposes, not financial advice, and you should always consult your own experts on both financial and compliance matters.

Do not use the YC SAFE template as-is. It lacks Canadian securities-law provisions. NACO's "Canadian SAFE" is the local adaptation, and Canadian counsel may adapt further. Some Canadian templates add a maturity date even though classic SAFEs have none.
Prospectus exemptions are required. A SAFE is a security under Canadian law. You need to rely on an exemption under NI 45-106 — most commonly the accredited investor exemption or the private issuer exemption. Confirm with a startup lawyer for each investor individually.
Form 45-106F1 filing: Required within 10 days of each distribution in most provinces. Missing this creates cleanup headaches at your next round.
SR&ED / IRAP / BDC considerations: These government programs are non-dilutive and should be stacked on top of (not instead of) SAFE financing. They don't affect SAFE terms but meaningfully extend runway and can raise the floor on your valuation conversation.

Summary Table: Reasonable Starting Position

Term	US Market Norm	Reasonable Ranges to consider, based on this research
SAFE structure	Post-money	Post-money
Valuation cap	$7.5M–$15M (pre-seed)	CAD $8M–$15M (or USD $10M–$15M if US investors). Higher valuations bring higher expectations.
AI premium	+42% vs non-AI seed	Depends on where you are. If you are an AI company in a "hot" sector, then you too should expect some premium.
Canadian adjustment	N/A	Negative 20–30% vs US if raising exclusively in Canada; neutralized with US investors
Discount	None (72% cap-only) or 20%	Consider starting cap-only; accept 20% for a meaningful lead
Post-money	81% of SAFEs	Yes
MFN	Near-baseline	Yes, next priced round only
Pro-rata	Major investors only via side letter	Side letter for $100K+ checks, next round only
Interest	None	None
Board observer	Lead only	Sources suggest to resist entirely at this stage
Information rights	Quarterly + annual cap table	Quarterly updates acceptable for major investors

For Canadian AI companies in "hot" sectors: The "Canadian discount" is largely neutralized by (1) structuring the SAFE in USD, (2) actively courting US-based angels, for whom your sector is a priority, and (3) leaning hard on well-documented and investor-visible research on why your company is solving an acknowledged global problem in a "hot sector" right now. The cost advantage of operating in Canada (30–60% below SF operating costs) is actually an asset in the pitch — more runway per dollar is a real return driver.

SAFE Calculators:

CapyTable SAFE Conversion Interactive Guide — combines educational content with interactive modeling; good for a founder who needs to understand the mechanics before presenting to investors.

Carta SAFE & Convertible Note Calculator — the most credible brand, allows multiple notes/SAFEs with varying terms, models conversion at Series A. Ideal for sharing with investors because they'll recognize Carta.

Start with CapyTable to understand the mechanics. Share Carta screenshots with investors when the conversation gets to term negotiation, since this is the most credible brand and will earn credibility with investors.

It's important for founders to spend time with these resources and calculators before and during term negotiations so that they develop a more intuitive understanding of what these terms mean, and how they play out over the course of multiple rounds of fundraising. I'm not an expert in SAFE negotiations, but you will be negotiating with experts. Just like playing poker with professional poker players, it's best to have some understanding of second- and third-order consequences before you place your bets. Always consult your own counsel before finalizing. What are your thoughts? Share them in the comments. If you liked this post, please send it to a friend. Want some help with your own startup and fundraising process? Please reach out.

Landon Steele is a startup consultant, angel investor, and advisor to early-stage founders. She is based in Vancouver, BC. She works with founders and the ecosystems that fund them across Canada and the US. Learn more at steeleconsultinggroup.com

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