Venture Financing
Convertible Note
An early-stage loan designed to convert into equity
What it is
A convertible note is an early-stage loan that is designed to convert into equity instead of being repaid in cash. The investor lends money that later turns into shares at the next priced round, usually with a discount and/or a valuation cap as a reward for investing early. Unlike a SAFE, it is actual debt, so it carries interest and a maturity date.