What Is Convertible Equity?

Written December 1, 2016

Convertible equity is similar to a convertible note, but convertible equity is not debt. Like convertible debt, convertible equity usually has the terms of a price cap and a discount, but there’s no interest or maturity date. The most common form of convertible equity is the “SAFE”.

The SAFE (Simple Agreement for Future Equity) was originated by Y Combinator and tends to be one of the most startup-favorable ways to finance a seed round.