Glossary · Fundraising

Convertible note

Also called convertible loan note, convertible loan

Definition

A convertible note is a short-term loan to a young company that converts into shares at a later funding round, usually at a discount or under a valuation cap. It carries interest and a maturity date, which is the main difference from a SAFE.

Related terms

SAFE note A simple agreement for future equity: early-stage funding that converts into shares at a later round. Cap table The table showing who owns what in a company: shares, options and convertibles. Term sheet A short, mostly non-binding summary of the key terms of an investment or deal.

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