Convertible note

Convertible note,

Definition of Convertible note:

  1. A convertible note is a loan where an investor provides cash to a startup company, and the investor gets an option to convert the debt to equity in the company.  If the startup is successful in reaching its next funding round, the investor usually exercises the option in time to watch his or her share price grow.  If the startup is unsuccessful, the investor usually does not exercise the note, and writes off the debt as a loss.  Sometimes the investor may exercise the note to acquire interest in the intellectual property produced the startup.

Meaning of Convertible note & Convertible note Definition