Convertible Note
A short-term loan from an investor that's designed to convert into equity later, usually at your next priced funding round, rather than being paid back in cash.
Quick Answer
How is a convertible note different from a SAFE?
A convertible note is technically debt, accruing interest and carrying a maturity date by which it must convert or be repaid; a SAFE is not debt, has no interest and no maturity date, and simply waits for a triggering event.
- Notes accrue interest; SAFEs generally do not
- Notes have a maturity date that can force a conversation
- Both typically use a cap and/or discount at conversion
The Lovie Advantage
Lovie tracks the maturity date and accrued interest on notes alongside SAFEs, so nothing quietly comes due unnoticed.
See how this connects to Valuation Cap. For the formal definition, see Investor.gov's glossary entry on bonds.
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