note tsunami

Definition

The overwhelming wave of convertible notes and SAFEs that convert to equity during a priced round, often revealing a far more complex cap table than founders realized. The moment when chickens come home to roost, except the chickens are financial instruments.

Example Usage

Our Series A triggered a note tsunami—$3M in SAFEs and convertible notes converted, leaving founders with way less ownership than we'd calculated.

Origin

Startup financing slang from the mid-2010s SAFE boom

Fun Fact

Note tsunamis are especially dangerous when accumulated notes include different valuation caps and discount rates, creating a mathematical nightmare during conversion.

Source: Startup financing and cap table management slang

Related Terms

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