Convertible Note
Definition
A convertible note is a loan that converts into equity at a future priced round, carrying an interest rate (typically 4 to 8 percent) and a maturity date (typically 18 to 24 months), usually with a valuation cap or discount.
How it comes up in fundraising
Notes preceded SAFEs as the default early-stage instrument; in 2026 they survive mainly in bridge rounds and some non-US deals.
Frequently asked questions
What is the difference between a convertible note and a SAFE?
A note is debt with interest and a maturity date that can technically be called; a SAFE is not debt, has neither, and cannot be called.
What happens at a note’s maturity date?
If no priced round has occurred, the note is technically repayable; in practice holders usually extend, convert at an agreed valuation, or negotiate.
Round Funded resources
Cite this term
Round Funded. "Convertible Note." Startup Fundraising Glossary.
Stable URL, it will not change: https://www.roundfunded.com/en/glossary/convertible-note
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