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What Is a Convertible Note? A convertible note is a short-term debt agreement that converts into equity at a future date. Usually, this happens when one of these events takes place: ? The company raises enough capital to reach a pre-determined benchmark.

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.

A convertible note is a debt instrument often used by angel or seed investors looking to fund an early-stage startup that has not been valued explicitly. After more information becomes available to establish a reasonable value for the company, convertible note investors can convert the note into equity.

With convertible notes, founders can offer better terms to an investor who writes the first check, and delay having to put a firm price on their company. Notes also enable companies to avoid extra legal fees associated with negotiations that take place during equity financing .

A convertible note agreement is a legal document that outlines the terms and conditions of a loan that can be converted into equity in the future. Essentially, it's a way for startups to raise money without having to give away equity upfront.

Yes as per the companies Act 2013, there is no restriction on issuing convertible notes to Indian or Domestic investors.

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