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Dictionary by pitch.dog
Term-sheet economics · Specialist

Conversion threshold

Also called: break point

ELI5

The exit value where an investor is better off converting.

Used in conversation

“The model marks the conversion threshold for each series.”

Definition

A value or condition at which converting preferred shares to common becomes economically preferable.

Here “Conversion threshold” means: A value or condition at which converting preferred shares to common becomes economically preferable.

Pitch context

You will see “Conversion threshold” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

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Sources & evidence · 5

Direct term-level sources and supporting source families.