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    Convertible Note

    Short-term debt that converts into equity at a future financing round.

    Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 5, 2026

    Definition

    A convertible note is a debt instrument that accrues interest and has a maturity date, but is designed to convert into preferred stock at the next qualified equity financing - typically at a discount to that round's price and subject to a valuation cap.

    What this means in practice

    Convertible notes pre-date SAFEs and remain common in MedTech bridges between priced rounds, especially when a company needs runway to hit a clinical or regulatory inflection point. Because notes carry interest and a maturity date, they create real risk if the next round is delayed.

    Examples

    • A surgical robotics startup raises a $3M bridge convertible note at 6% interest, 20% discount, $40M cap to extend runway to a pivotal trial readout.
    Common pitfalls
    • •Letting notes mature without a conversion trigger - investors can demand repayment in cash the company doesn't have.
    • •Stacking notes with conflicting caps and discounts that complicate the cap table.

    Primary references

    3 sources
    Link health: 2 verified 1 bot-blocked· last checked 2026-05-09
    NVCA·1SVB·1PitchBook·1
    1. 1
      NVCA Model Convertible Note
      Verified
      NVCAnvca.org
    2. 2
      Silicon Valley Bank - Healthcare Reports
      Verified
      SVBsvb.com
    3. 3
      PitchBook - MedTech Coverage
      Bot-blocked
      PitchBookpitchbook.com

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