The method
How it is worked out
Shares = (principal + accrued interest) ÷ min(cap price, discounted round price)
- accrued interest
- Simple interest to conversion
- cap price
- Cap ÷ pre-round shares
Convertible Note Calculator
Model a convertible note with interest, a cap and a discount, and see exactly what it dilutes at the next round. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Compound interestSome notes compound; this uses simple interest.
- MaturityIf no round happens by maturity the note may be repayable.
- MFN clausesLater notes with better terms can reprice earlier ones.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the Convertible Note Calculator
Model a convertible note with accrued interest, a valuation cap and a discount, and see exactly how much it dilutes existing holders when it converts at the next round.
How it works and an example to tryShow less
How to use the result
Principal plus simple interest to conversion is divided by the conversion price, the lower of the cap price and the discounted round price. New shares are added to the pre-round share count to give the note holder's ownership and everyone else's dilution.
Example to try
A £750,000 note at 6% held 18 months converts £817,500. With a £10m cap on 8m shares the cap price is £1.25 against a £2.00 discounted round price, giving 654,000 shares and 7.6% ownership.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Founders with notes outstanding, note holders projecting their stake and lawyers or advisers preparing the conversion mechanics for a round.
Mistakes worth avoiding
- Ignoring accrued interest, which grows the converting amount.
- Letting a note run past maturity without agreeing what happens.
- Overlooking most-favoured-nation clauses that reprice earlier notes.
Questions
What does the Convertible Note Calculator do?
Model a convertible note with interest, a cap and a discount, and see exactly what it dilutes at the next round.
How should I use the result?
Principal plus simple interest to conversion is divided by the conversion price, the lower of the cap price and the discounted round price. New shares are added to the pre-round share count to give the note holder's ownership and everyone else's dilution.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with a convertible note calculator?
Ignoring accrued interest, which grows the converting amount. Letting a note run past maturity without agreeing what happens. Overlooking most-favoured-nation clauses that reprice earlier notes.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Results are estimates based on the figures entered, for general information only, and not financial, investment, tax or legal advice. See our terms of use.