Convertible Notes

A convertible note is a type of financial instrument used by startups to raise money. It's a loan that investors give to the company, which can later be converted into equity, or company shares, instead of being repaid in cash. This typically happens during a future funding round when the company values its shares. Convertible notes often include a discount or valuation cap, giving early investors a better deal on their shares compared to later investors. Essentially, they allow companies to secure funding quickly while deferring the difficult task of valuing the business until later.