Convertible Note Calculator
Convertible notes are debt instruments that convert into equity at a future financing round. Unlike SAFEs, they accrue interest over time, which increases the total amount that converts into shares. This calculator computes accrued interest, conversion price, and resulting ownership.
Enter your note terms, dates, and next round details below to see exactly how many shares the noteholder receives.
Note Terms
Conversion Terms
Results
Enter all required values above to see the calculated results.
How Convertible Note Conversion Works
A convertible note is a short-term debt instrument that converts into equity upon a qualifying financing event (typically a priced round). Unlike a SAFE, a convertible note is actual debt: it has a principal amount, an interest rate, and a maturity date.
Interest accrual is the key difference between convertible notes and SAFEs. The interest accrues from the issuance date to the conversion date, and the total outstanding debt (principal plus accrued interest) is what converts into equity. Most notes use simple interest, though some specify annual compounding or continuous compounding.
Like SAFEs, convertible notes typically include a valuation cap and/or a discount. The cap sets a maximum valuation for conversion, while the discount gives the noteholder a percentage reduction off the round price. The noteholder gets whichever method produces a lower conversion price (and therefore more shares).
The cap price is calculated by dividing the valuation cap by the fully diluted share count. The discount price is the round's price per share multiplied by (1 minus the discount percentage). The lower of these two becomes the conversion price, and the total outstanding debt is divided by this price to determine shares received.
Convertible notes were the standard pre-seed and seed instrument before SAFEs became popular. They are still commonly used, especially when founders want a maturity date to create urgency for a future round, or when investors prefer the legal protections of a debt instrument.