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Dictionary by pitch.dog
Funding instruments & exemptions · Core

Convertible note

Also called: convertible loan note, CLN

ELI5

A loan that may turn into shares later.

Used in conversation

“The convertible note accrues interest until conversion.”

Definition

A debt instrument intended to convert into equity under specified events or terms.

Here “Convertible note” means: A debt instrument intended to convert into equity under specified events or terms.

Pitch context

You will see “Convertible note” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches funding instruments & exemptions.

Why it matters: In funding instruments & exemptions, 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.

Connected terms

  • SAFEA SAFE is generally not debt and lacks maturity and interest; a convertible note is debt that may convert under its terms.
  • Convertible debtThe search label “convertible note” can route to both entries.
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Sources & evidence · 5

Direct term-level sources and supporting source families.