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What Is Convertible Equity?

Written December 1, 2016

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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.

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