Convertible Note Calculator
A convertible note through to conversion, with the accrued interest converting alongside the principal. Unlike a SAFE, a note is debt: it accrues interest, it has a maturity date, and both of those are real terms rather than formalities.
Also called: convertible debt calculator, note conversion calculator.
₹56,00,000 converts, being 50,00,000 of principal plus ₹6,00,000 of interest, into 14,00,000 shares at ₹4. 600000 of interest accrued at 8% simple over 1.5 years, and it converts rather than being repaid. It buys 150000 of the shares issued. The cap governed at 4 a share against 6.4 after the discount.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
How this is calculated
The note accrues interest, usually simple rather than compound, and at conversion the entire balance including that interest buys shares at the lower of the cap price and the discounted round price. The interest is therefore not repaid, it is converted, which makes an eight percent rate over eighteen months worth about twelve percent more equity to the investor. The maturity date is the other difference from a SAFE: if no qualifying round happens before it, the note becomes repayable, and a startup that cannot repay is negotiating from a weak position. That is the risk a SAFE was invented to remove.
the note accrues interest and the whole balance converts, so the interest buys equity rather than being repaid- P
- Principal
- r
- Interest rate
- t
- Years
Method and limits
What it assumes
- A qualifying priced round occurs before maturity.
What it deliberately does not model
- Maturity, repayment and change of control terms often matter more than the conversion arithmetic.
- Interest treatment varies between notes and some accrue only until a stated date.
Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator
Frequently asked questions
- Is the interest paid back in cash?
- Usually not. It converts into equity along with the principal, so the rate buys the investor more shares rather than producing a cash return.
- How does a note differ from a SAFE?
- A note is debt with interest and a maturity date. If no qualifying round happens before maturity it becomes repayable, which is a real risk a SAFE does not carry.