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🌍 US & Europe · Cap table & fundingConvertible note
Also called: convertible loan, conv note
In one line
A short-term loan to a startup that converts into equity at a later round rather than being repaid in cash, usually with a discount or cap.
In plain English
Like a SAFE but structured as debt with interest and a maturity date. Early backers lend money that later turns into shares at a favourable price when the company raises a priced round.
If you were explaining it to a 5-year-old
Someone lends the toy club coins. Instead of paying it back, the club later gives them toys — and a few extra for being early.
Why it matters when you sell
Notes convert into shares and dilute the cap table at the next round, which feeds into the share count your ownership is calculated from.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.
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