Business · Startup equity
Convertible note calculator.
Principal plus accrued interest, converted at the better of the cap price and the discount price. Everything runs in your browser.
A $250,000 note at 6% simple interest for 18 months accrues $22,500, so $272,500 converts. With a $5,000,000 cap on 8,000,000 shares the cap price is $0.625, lower than the 20% discount price of about $0.948, so the cap applies: 436,000 shares, which is 4.31% after a $2,000,000 round at a $10,000,000 pre-money.
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How a note converts
A convertible note is a debt instrument that usually converts into equity at the next financing, at a price set by that round, often at a discount to the price later investors pay or subject to a conversion price cap (Cooley GO). Unlike a SAFE, interest accrues and there is a maturity date; Y Combinator's comparison page describes note interest as often 2 to 8%. This calculator adds simple interest to the principal and converts that total at the lower of two prices:
Cap price = valuation cap / shares outstanding before the round. Discount price = round price x (1 - discount). The note holder gets the better price. Because the round's pre-money valuation is assumed to include the note shares, the round price is solved together with the share count: pre-money / (existing shares + note shares).
Worked example
Principal $250,000, 6% simple interest, 18 months: interest = 250,000 x 6% x 18 / 12 = $22,500, so $272,500 converts. Cap price = 5,000,000 / 8,000,000 = $0.625, so the cap gives 272,500 / 0.625 = 436,000 shares. With those shares in the pre-money, the round price is 10,000,000 / 8,436,000 = $1.1854, and the discount price would be 0.8 x 1.1854 = $0.9483, which is higher than the cap price, so the cap applies. The $2,000,000 raise buys 1,687,200 shares; the total is 10,123,200 shares: note holder 4.31%, new investors 16.67%, existing holders 79.03%. The note holder pays an effective 47% below the round price.
Limits
Note terms vary: interest may be simple or compound, day counts differ, some notes convert only above a minimum financing size, and the cap may be compared with the pre-money capitalization in a different way. Maturity, repayment and default are not modelled. If the note has not converted yet, check what your documents say will happen at maturity. Convertible securities can also be treated differently from the pre-money in the term sheet, which changes who bears the dilution.
Sources, opened 8 October 2026: Cooley GO glossary, Convertible Note (debt that converts at a price set at the next round, often at a discount or subject to a cap); Cooley GO, Convertible Notes in Southeast Asia and India (conversion discount defined as a percentage discount on the price per share); Y Combinator, Convertible note vs. Priced Equity Round (notes accrue interest, often 2 to 8%, and have a maturity date).
Frequently asked questions
How do you calculate convertible note conversion?
Add accrued interest to the principal, then divide that total by the conversion price. The conversion price is the lower of the cap price (valuation cap divided by pre-round shares) and the round price less the discount.
Is note interest simple or compound?
This calculator uses simple interest: principal x rate x months / 12. Your note may specify a different method, so check it. Y Combinator describes note interest as often 2 to 8%.
What happens if the cap and the discount both apply?
The note converts at whichever gives more shares. Here a $5,000,000 cap beats a 20% discount; a much higher cap would lose to the discount.
How does a convertible note differ from a SAFE?
A note is debt with interest and a maturity date; a SAFE is not debt and has neither. See the SAFE conversion calculator for the post-money SAFE version.
Why is my lawyer's result different?
Terms differ: compounding, day counts, whether the pre-money includes the note shares, minimum financing size and option pool changes. Use this for planning, not for the final cap table.
Educational only. Not legal, tax or investment advice.
Planning and learning aid only. Real terms depend on the signed documents and your jurisdiction. Tax treatment (409A valuations, 83(b) elections, ISOs and similar) is left to a qualified professional. Amounts are in any one currency; the symbol is only a label.