There are many ways to raise financing for your company, but one of the most popular is a convertible note.With a convertible note, the investor loans money to the startup in return for equity in the company (rather than a payout of the principal plus interest).In this article, we\u2019re going to cover the three most common terms you\u2019ll come across in a convertible note: interest rate, conversion discount, and valuation cap.What is a Convertible Note?What\u2019s the Benefit of a Convertible Note?Terms of Convertible NotesTerm 1: Interest RateTerm 2: Conversion DiscountTerm 3: Valuation CapHow Do Convertible Notes Affect Dilution?How to Be Smart with Convertible NotesBefore we can completely understand the terms in a convertible note, we need to understand what a convertible note is and how it differs from a convertible security.A convertible note is a type of convertible security. So then what\u2019s a convertible security? Convertible securities include various instruments that expect to ultimately become stocks such as SAFE\u2019s KISS-A\u2019s and convertible notes. Within the world of convertible securities, convertible notes take up a space that is known as debt equity.Essentially, convertible notes act as an IOU, but instead of paying cash, you pay in equity. Here\u2019s a more formal definition\u2026Convertible notes also carry a unique characteristic among investments. Typically, investors can only cash out during a liquidity event, like the sale of the company, but convertible notes are technically debt, and as such, if held to maturity, a note holder could demand payback.The maturity date is a deadline for a preferred round, and only during a preferred round can a convertible note convert into equity. Let\u2019s say there was a maturity date of 2 years from the date of investment. If the company hasn\u2019t had a preferred round within 2 years, the investor could demand their money back. It\u2019s\u2026<\/p>","protected":false},"excerpt":{"rendered":"
\u6709\u5f88\u591a\u65b9\u6cd5\u53ef\u4ee5\u4e3a\u60a8\u7684\u516c\u53f8\u7b79\u96c6\u8d44\u91d1\uff0c\u4f46\u662f\u6700\u53d7\u6b22\u8fce\u7684\u65b9\u6cd5\u4e4b\u4e00\u662f\u53ef\u8f6c\u6362\u503a\u5238\u3002 [\u2026]<\/span><\/p>","protected":false},"author":0,"featured_media":2796,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[35],"tags":[],"_links":{"self":[{"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/posts\/3228"}],"collection":[{"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/comments?post=3228"}],"version-history":[{"count":0,"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/posts\/3228\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/media?parent=3228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/categories?post=3228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/afluxcoin.com\/zh\/wp-json\/wp\/v2\/tags?post=3228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}