Note conversion with cap & discount. The Convertible Note Calculator takes note principal, interest rate, years outstanding, valuation cap, discount, pre-money valuation of the round, round price per share and returns shares on conversion plus amount converting (principal + interest), conversion price per share, ownership after conversion (approx.). Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Startup metrics are about the efficiency of growth: how much it costs to win and keep customers, how fast recurring revenue compounds, and how long the cash lasts. Investors read these numbers before they read the pitch. Use the worked example below to check the maths against your own figures.
How the Convertible Note Calculator works
A convertible note is a loan that converts into equity at the next round, with accrued interest added to the principal and the cap or discount setting the price. The ownership shown is approximate.
Worked example
With the example values (note principal of $500,000, interest rate of 6%, years outstanding of 1.5, valuation cap of $8,000,000, discount of 20%, pre-money valuation of the round of $12,000,000, round price per share of $2), the shares on conversion is 408,750; amount converting (principal + interest) $545,000.00, conversion price per share $1.33, ownership after conversion (approx.) 6.38%. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
Assumptions and limits: Simple interest; option pool and other notes not modelled.
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Frequently Asked Questions
How is shares on conversion calculated?
converting amount = principal × (1 + rate × years); conversion price = lower of cap price and discounted price.
Which figures do I need?
Note principal, interest rate, years outstanding, valuation cap, discount, pre-money valuation of the round, round price per share. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What do investors consider healthy?
Common benchmarks: LTV:CAC above 3, CAC payback under 12–18 months, net revenue retention above 100%, monthly churn under 2% for SMB and under 1% for enterprise, and at least 12–18 months of runway.
What assumptions does this calculator make?
Simple interest; option pool and other notes not modelled.
