Convertible note/loan

An investment provided by an investor as a credit (loan) for a startup which converts into the investor’s share in a startup upon the satisfaction of the specified conditions in the next investment round, exit or the expiry of the specified period of time. It is not necessary to determine the value of a startup at the moment of investment, but to estimate the possible future value at which the loan will be converted (i.e. the investor stakes on future success of a startup). Typically used in the first stages of a startup (seed) or bridge financing.