Convertible Debt

Also known as convertible notes, is a financial instrument that grants the holder the option to exchange it for a predetermined number of common stock shares in the company or an equivalent amount of cash. This type of debt enables startups to secure funding while deferring the valuation process until the company reaches a more advanced stage. Being a loan, convertible debt may also accumulate interest. The calculation of accrued interest varies based on the terms outlined in the purchase agreement. The specifics of accruing interest on a convertible promissory note outline the approach for determining the number of days between two given dates.