Template

Free Convertible Note Template

Draft a professional convertible debt agreement in seconds with AI-powered customization and real-time track changes for your next seed round.

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What's inside

Sections, vetted by counsel

01

Principal & Interest

Defines the total amount borrowed and the annual interest rate that accrues until conversion or maturity.

02

Maturity Date

Sets the deadline for repayment if a qualifying equity financing event does not occur first.

03

Conversion Mechanics

Outlines how the debt turns into equity, including the discount rate and the valuation cap.

04

Qualified Financing

Specifies the minimum amount of capital the company must raise to trigger an automatic conversion.

05

Liquidity Events

Determines what happens to the investment in the event of a company sale or IPO.

06

Default Terms

Lists the conditions under which the investor can demand immediate repayment of the loan.

How it works

From prompt to contract in 4 steps

1

Describe Your Terms

Enter your valuation cap, discount rate, and principal amount into our AI interface.

2

AI Customization

Our engine generates a legally structured convertible note tailored to your specific deal points.

3

Review Tracked Changes

Audit every clause with built-in track changes to see exactly how the AI drafted your document.

4

Export to Word

Download your finalized note as a professional DOCX file ready for signatures.

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About

A convertible note is a form of short-term debt that converts into equity, typically in conjunction with a future financing round. In essence, the investor loans money to a startup and, instead of a return in the form of principal plus interest, the investor receives shares in the company. This instrument is favored by early-stage startups because it delays the need to value the company until a later date when more data is available. Our convertible note template includes essential clauses such as the valuation cap, discount rate, interest accrual, and maturity date. Using AI to draft your convertible note ensures that the language is consistent with current market standards while allowing for rapid customization to fit your specific term sheet. This approach reduces legal friction and helps founders close seed rounds faster.

FAQ

Frequently asked questions

Is this convertible note legally binding?
Yes, once signed by both the company and the investor, a convertible note is a legally binding debt instrument. However, you should have it reviewed by legal counsel to ensure it meets your specific regulatory needs.
What is a valuation cap?
A valuation cap is a term that sets the maximum effective valuation at which your note will convert into equity, protecting the investor from dilution in a high-valuation round.
Can I export this to Microsoft Word?
Absolutely. All templates on ContractMaker.ai are designed to be exported as Word-grade DOCX files, maintaining professional formatting and styles.
How does the AI handle track changes?
As you modify the terms or ask the AI to rewrite sections, the system highlights every addition and deletion so you can maintain full version control.
Does this template include a discount rate?
Yes, the template includes standard language for a conversion discount, which rewards early investors for taking on more risk than later-stage participants.

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