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fundraising
Convertible Note
Debt instrument that converts to equity at the next funding round.
A Convertible Note is a form of short-term debt that converts to equity at a future financing round. Unlike SAFEs, convertible notes accrue interest and have a maturity date. They typically include a valuation cap and/or discount.
Tips
- Understand the interest rate and maturity
- Negotiate reasonable valuation caps
- Track conversion scenarios carefully
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