Convertible Note

Definition

A loan that converts into equity during a future funding round, allowing investors and founders to avoid the uncomfortable conversation about what the company is actually worth. It's a financial IOU wrapped in optimism and legal jargon.

Example Usage

"We raised $500K through convertible notes, which means we borrowed money that turns into ownership when someone smarter than us figures out our valuation."

Related Terms

Beginner

bootstrapped

Building a company with personal savings, credit cards, and stress ulcers instead of venture capital—either a badge of honor or an excuse for slow growth, depending on your exit results. It's entrepreneurship on hard mode.

🚀 Startup / VC

Intermediate

full-stack startup

A company that owns and controls every layer of its product or service delivery, from manufacturing to customer experience, rather than relying on existing infrastructure or platforms. It's vertical integration for the startup age.

🚀 Startup / VC

Beginner

launch

The moment when something new is officially unleashed upon the world, whether it's a product, company, or ship sliding into water. In business and tech, launches involve coordinated marketing campaigns, press releases, and the collective hope that people will actually care. It's the corporate equivalent of a grand opening, complete with champagne (or energy drinks, depending on the industry).

🚀 Startup / VC

Advanced

409A valuation

An IRS-mandated appraisal of your company's common stock price, required so employees don't accidentally commit tax fraud when exercising options. It's always mysteriously lower than what you tell investors your company is worth.

🚀 Startup / VC

Beginner

Seed Round

The first significant round of funding, where investors plant money in your startup like seeds in a garden, fully expecting that most gardens will produce nothing but weeds and regret. It's typically between $500K and $5M, which is a lot of money for a PowerPoint presentation.

🚀 Startup / VC

Advanced

hurdle rate

The minimum return a VC fund must achieve before partners can collect carried interest—usually 8% annually. The bar LPs set to ensure their capital at least beats a boring index fund before the GP gets rich.

🚀 Startup / VC

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