All terms
Investment & FinanceStartup Lifecycle
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.
Related terms
Shared paths + categoryInvestment & Finance
Valuation Cap
Maximum company valuation at which a SAFE or note converts to equity.
Founder & Investor Primer
Investment & Finance
Bridge Round
Interim financing between priced rounds, usually convertible.
Same category
Investment & Finance
Simple Agreement for Future Equity(SAFE)
Convertible instrument that converts to equity at a future priced round.
Same category
Investment & Finance
Series A / B / C Financing Rounds
Sequential priced equity rounds in venture-backed companies, typically progressing from product-market validation (A) to scale (B) to growth (C+).
Founder & Investor Primer · adjacent
Investment & Finance
Term Sheet
Non-binding outline of the key economic and control terms of an investment.
Founder & Investor Primer · adjacent
Investment & Finance
Capitalization Table(Cap Table)
Ledger of all securities issued by a company and who owns them.
Founder & Investor Primer
Latest in MedTech
Primary references
3 sourcesLink health: 3 verified· last checked 2026-06-20
NVCA·1SVB·1PitchBook·1
- 1NVCA Model Convertible NoteVerifiedNVCAnvca.org
- 2Silicon Valley Bank - Healthcare ReportsVerifiedSVBsvb.com
- 3PitchBook - MedTech CoverageVerifiedPitchBookpitchbook.com
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