Definition
Interest on convertible notes that automatically converts to equity at future rounds, making the note holders richer for waiting.
Example Usage
Our seed round had 8% accrued interest, so the $100K note became $108K in equity when we raised Series A.
Origin
Finance terminology; commonly applied to convertible debt instruments in startup funding.
Fun Fact
Accrued interest can significantly increase investor ownership without additional capital contribution.
Source: Startup financing and debt instruments
Related Terms
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See “Accrued Interest” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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