A convertible note is a type of debt financing that allows the borrower to convert the loan into equity in the future, usually at the time of a specific event such as the company reaching a certain valuation or the issuance of new shares. This type of financing is often used by startups and other early-stage companies that are not yet ready to issue equity but need capital to fund their operations. The terms of a convertible note, including the conversion price and the conversion event, are typically negotiated between the borrower and the lender.
