Convertible Notes

Convertible notes are short term debt instruments that convert into equity at a future date, typically upon a specified trigger event such as a funding round or company milestone. In practice, investors extend capital to early stage companies with the understanding that the loan will eventually convert to stock ownership at a pre determined valuation discount or cap. This instrument is used in early stage fundraising to defer valuation negotiations, accelerate capital deployment, and provide investors with downside protection while allowing founders to retain control during the company's initi

Convertible Notes sits under Fundraising and Venture Capital in the Entrepreneurship & Venture domain of the Luminid skills catalogue.

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