Convertible note

Also called: convertible debt, convertible, note, convertible loan

A loan from an investor that is meant to turn into shares later instead of being paid back in cash. Unlike a SAFE it is debt, so it carries interest and has a date when it comes due.

For example: An investor lends a startup money through a convertible note. At the next funding round, the amount owed plus interest turns into shares.

Connects to 4

SAFE Concept
Valuation cap Concept
Equity Concept
Small business loan Concept

This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.