People also ask
Is a convertible note a long term liability?
A convertible note should be classified as a Long Term Liability that then converts to Equity as stipulated from the contract (usually a new fundraising round).
What is a convertible note why is it important to include it in the cap table?
A convertible note is a combination of debt and equity that helps a startup raise needed capital while still being able to delay valuing the company.
Are convertible notes short term or long term?
A convertible note refers to a short-term debt instrument that allows an investor to convert debt to an equity stake in a company.
Do convertible notes show on a cap table?
A fully-diluted cap table shows the impact of the conversion of convertible notes. A convertible note has a date of issue, an interest rate, a discount rate, a valuation cap, and a maturity date.
What is a typical term on a convertible note?
The loan is usually short-term, with repayment within a year or two. However, unlike a promissory note where a company will repay the borrowed capital, the investor in a convertible note is repaid with equity in the company.
y combinator convertible note term sheet