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In this video, Scott from Cruise Consulting discusses a sample convertible note agreement. He emphasizes the importance of using a law firm's template for documentation, as they will create the most accurate legal instruments. Key elements of a convertible note include the principal amount, payment terms, and valuation cap, which are crucial components to understand. Additionally, the agreement will specify whether it converts into common or preferred stock, with institutional venture capitalists typically favoring preferred shares. Scott encourages viewers to review the template to gain a better understanding of these concepts.