Convertible Note

A convertible note is a type of investment security that startups use to raise money from angel investors and venture capitalists.

Instead of giving investors a stake in the company (like stock), convertible notes give investors the right to buy shares at a fixed price (often called the “conversion price”) after a certain point in time or when the company raises a certain amount of money. This makes it easier for startups to raise money because they don’t have to worry about setting a valuation for their company and can just focus on hitting milestones that will trigger the conversion of the notes into shares.

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