The convertible notes are important documents and short term debt notes that convert into integrity, commonly in co-existence with venture capital for expanding the business or new business. Simply convertible notes are the loan that automatically converts into justice at qualified finance event. The key principles of convertible note are; maximum valuation, maximum duration, discounts, interest rate and amount of qualified financing. The fundamental benefit of convertible note is it does not force the issuer or investors to control the company total value. In other words you can say that the investor loan some money for the startup of new business and probably get their money back with interest.
The basic advantages of convertible notes are as follows; legal and cheaper documents for setup financing documents, valuation determined by the qualified financing, simple way of payments, quicker way of payments and protects against down rounds and loans. While there are some disadvantages of convertible notes are; a risky treatment between. A series and the seed round and the second is nonalignment inducement. Convertible bonds are also type of convertible notes the holder coverts the convertible bond into the fixed share of amount.