Convertible Notes: The Complete Guide

Convertible notes now make up 7% of the pre-seed market, they're specialized, not obsolete. This guide covers how notes convert, the hidden costs (AFR floor, phantom income, QSBS timing), and when they actually beat SAFEs. ‍

What you get:

• The six-term anatomy of a convertible note and why the AFR floor and OID rules matter

• A straight Notes vs. SAFE vs. KISS comparison with actual tax and maturity differences

• Five specific scenarios where notes still win—biotech, non-Delaware structures, forcing functions, lead investor preference, or investor policy

• A checklist to avoid the six most common mistakes—modeling interest, tracking maturity, and stacking every open instrument