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[Music] hey its scott owen of cruz consulting and today were defining what is a convertible promissory note and at the simplest level it is a tool a debt tool for investors or lenders to give a startup capital you typically see it at the early stage you know seed stage pre-seed stage because at that stage no one really knows what the valuation of company is and so they typically have a conversion cap which is basically the equity value that the company uh that the investment the or the loan converts into inequity if another round comes in thats generally what everyones playing for with the convertible promissory note um there are situations where its done via its used for a bridge round where the companys not doing that like its not a superstar but its not like its a company deserves to exist and so the investors will put more money in themselves because the company cant raise capital from the outside investors so theyll typically use like a promissory note convertible um
