Convertible Note Agreement
Startup financing instrument providing debt that converts to equity upon specific events, covering interest rates, conversion terms, valuation caps, and investor rights for flexible early-stage funding.
Key Clauses
Principal Amount
Specifies total investment amount being provided to startup through convertible debt instrument.
Interest Rate
Establishes annual interest rate accruing on principal amount until conversion or repayment occurs.
Conversion Rights
Defines circumstances triggering debt-to-equity conversion and conversion calculation methods.
Qualified Financing
Establishes minimum investment threshold and conditions that trigger automatic conversion to equity.
Events Of Default
Specifies situations requiring immediate repayment and consequences of payment default.
Investor Rights
Grants information rights, participation rights, and protections during conversion process.
Use This Template
When You Need This
- Raising pre-seed or seed funding before establishing formal company valuation
- Providing bridge financing between major equity funding rounds for startups
- Offering investors equity upside while maintaining debt flexibility for early-stage companies
- Simplifying fundraising process compared to full equity round negotiations