Convertible Promissory Note
A convertible promissory note is a debt instrument documenting a loan from an investor to a company that is designed to convert into equity at a future qualified financing round, or be repaid with interest if no such round occurs before maturity. Use this when an early-stage company is raising a bridge loan from an investor ahead of a priced equity round, and the parties want the loan to convert into shares of that future round (typically at a discount and/or subject to a valuation cap) rather than being repaid in cash. This is a starting draft only, not tax or securities-law advice — convertible notes implicate securities law, cap table math, and tax treatment that vary by jurisdiction and by round terms, so have a lawyer or accountant review the final terms before any money changes hands or any note is signed.
What's included
A ready-to-use convertible promissory note with signature fields already placed for Company and Investor. Fill in the bracketed details (like [Company Name] or [Date]) using Docracy's built-in text editor, then send it out for signature.
This is a general template for informational purposes only and does not constitute legal advice. Consult a qualified attorney to review it for your specific situation and jurisdiction before use.
Key clauses
- Principal amount and interest rate
- Maturity date and repayment terms
- Conversion mechanics upon a qualified financing
- Valuation cap and/or conversion discount
- Events of default
- Representations and warranties of the company
What you'll fill in
[Investor Name][Company Name][Principal Loan Amount][Interest Rate][Maturity Date][Valuation Cap][Conversion Discount Percentage][Qualified Financing Threshold Amount]Legal summary
Signing a convertible promissory note creates a legal debt obligation from the company to the investor, with terms specifying that this debt is intended to convert into equity if a qualifying financing round happens, typically at a discount to that round's price or subject to a valuation cap. If no qualifying round occurs by the maturity date, the note generally becomes repayable with interest as an ordinary loan. Because convertible notes touch securities law, cap table dilution, and tax treatment that vary significantly, the specific terms should be reviewed by qualified counsel before any funds are exchanged.
Free for up to 2 signers, no account required. Need unlimited? Flat $10/month.
FAQ
Is this Convertible Promissory Note legally binding?
Signing through Docracy uses a simple electronic signature (SES), which is legally recognized for everyday business agreements under laws like the U.S. ESIGN Act and the EU's eIDAS regulation. This is a general template, not legal advice — for high-stakes or regulated agreements, have a qualified attorney review it for your situation.
Who needs to sign this Convertible Promissory Note?
This template includes signature fields for Company and Investor — already placed, so you just fill in the details and send.
Can I edit this Convertible Promissory Note before sending it?
Yes — Docracy's editor lets you edit the text, add or remove signature fields, redact sections, and reorder pages before you send it.
Do I need an account to send this Convertible Promissory Note?
No — it's free for up to 2 signers with no account required. Create a free account only if you want to save it to a dashboard or reuse it later.
Try it with an AI assistant
Paste one of these into ChatGPT, Claude, or your assistant of choice:
“Explain how a convertible promissory note converts into equity in plain language.”
“What's the difference between a valuation cap and a conversion discount in a convertible note?”
“Generate a filled convertible promissory note using this template between an angel investor and an early-stage startup.”
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Free for up to 2 signers, no account required. Need unlimited? Flat $10/month.