Convertible notes are debt allowing for conversion into stock at a price set by a future financing round.

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Convertible notes are a popular form of financing for startups, where investors provide a loan that can be converted into equity at a later date, usually at the company's next financing round. The conversion price is typically set at a discount to the valuation of the later funding round, incentivizing early investors to provide capital while taking less dilution than they would by purchasing equity outright.

Convertible Notes Are Debt Allowing for Conversion into Stock at a Price