Fundraising
Convertible note
A convertible note is a loan that converts into equity at a future financing round, typically with a valuation cap or discount. Unlike a SAFE, a convertible note is debt: it accrues interest and has a maturity date at which repayment can be demanded.
In plain terms: A loan that turns into shares — but is still a loan until it does.
Why it matters
The maturity date is the difference that matters. A note reaching maturity without a qualifying round leaves the company technically in default, which is a negotiation nobody wants at that moment.
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