Definition
What is convertible note?
A convertible note is a short-term loan from investors that converts into equity at a later financing round, usually with a valuation cap and/or discount. Unlike a SAFE, it accrues interest and has a maturity date.
If the note reaches maturity before a qualifying round, the company and investors typically negotiate an extension or conversion; repayment is possible but rare in practice.
Convertible notes remain common in some markets and with some angel groups, while SAFEs dominate early rounds in others.
General information, not legal, tax or investment advice.