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Convertible notes are originally structured as debt investments, but have a provision that allows the principal plus accrued interest to convert into an equity investment at a later date.
Also known as convertible promissory notes, bridge notes, or convertible debt. Since convertible notes are securities, they must be registered, or qualify for an exemption from registration, under the Securities Act.
A convertible promissory note is a debt instrument that converts into equity of the issuing company upon certain events. Typically, a note would convert into equity in a subsequent equity financing round and perhaps upon the note's maturity or a sale of the company.
Checks, bills of exchange, and promissory notes are all considered negotiable instruments because the person who holds these notes can claim payment provided that they are taken: For consideration.
A convertible note, or convertible debt security, is debt that can convert into equity upon a future qualifying event or transaction, such as a priced equity round raised from venture capital investors.
Convertible debt is a loan, note or bond instrument that converts to equity when a specified future event occurs. A convertible promissory note is a promissory note that converts in the same way as all other convertible debt.
Typically, promissory notes are securities. They must be registered with the SEC, a state securities regulator, or be exempt from registration.
Convertible Note Meaning: A Hybrid of Debt and Equity. What is a convertible note? In short, a convertible note is originally structured as a debt investment but has a provision that allows the principal plus accrued interest to convert into an equity investment at a later date.