Calculate how a convertible note converts into equity after interest accrual. The tool includes principal, interest, discount, and next-round share price to estimate shares and dilution risk.
The result shows the financing impact on ownership, valuation, conversion, or dilution. A stronger result protects founder ownership while preserving enough incentive for investors and employees.
This estimate is educational and should not replace legal, tax, or fundraising advice. Real term sheets may include preferences, pro rata rights, participation, vesting, and other provisions.
A $100,000 note at 8% for 2 years becomes $116,000 before conversion. With a 20% discount to a $2 share price, conversion price is $1.60.
Multiply the principal by the annual interest rate and time outstanding, or use compound interest if the note agreement requires compounding.
The note usually converts into equity using the discount, valuation cap, or negotiated conversion terms defined in the note agreement.
A discount lowers the investor conversion price, which increases the number of shares issued and increases founder dilution.
For investors, the better term is the one that creates the lower conversion price. For founders, that term creates more dilution.
Dilution depends on accrued balance, valuation cap, discount, financing price, and the fully diluted share count at conversion.
| Module | What it shows |
|---|---|
| Main Result | Primary startup finance output for this calculator. |
| Ownership Impact | How the scenario changes equity or valuation. |
| Health Score | Practical quality score from the result. |
| Decision Signal | Recommended action based on the result. |