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Because in most cases you won't know how many shares your convertible debt will convert into, most companies don't include convertible debt on their cap table. You should keep a ledger of issued notes (listing the holder of each note, the principal amount and the date of issuance).
A convertible note is legally a loan where the full amount (including interest) is applied to the purchase of stock at the next equity investment round. Unlike the current SAFE, the valuation cap on the convertible note is usually based on a pre-money valuation.
A convertible note is a form of short-term debt that converts into equity, typically in conjunction with a future financing round; in effect, the investor would be loaning money to a startup and instead of a return in the form of principal plus interest, the investor would receive equity in the company.
A convertible note cap sets the maximum valuation at which the investment made via the convertible note can convert into equity. Investors in the convertible note typically get converted at the lesser of the valuation of the next qualified priced round and the cap.
A Convertible Note is a type of financial document, which allows companies to exchange equity or other non-tangible assets for a typically short-term loan.