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Dictionary by pitch.dog
Valuation & conversion mechanics · Core

Discount rate

Also called: conversion discount

ELI5

Early investors convert at a cheaper share price.

Used in conversation

“The note converts with a twenty percent discount.”

Definition

A percentage reduction from a later financing price used to calculate conversion of an earlier instrument.

Here “Discount rate” means: A percentage reduction from a later financing price used to calculate conversion of an earlier instrument.

Pitch context

You will see “Discount rate” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches valuation & conversion mechanics.

Why it matters: In valuation & conversion mechanics, 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

  • Discount rateThe same visible label “Discount rate” names different concepts.
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Sources & evidence · 5

Direct term-level sources and supporting source families.