Convertible notes on your cap table: what to track before conversion
How convertible notes affect dilution modeling, what to record before conversion, and why debt should stay separate from issued shares.
Convertible notes are debt that may convert into equity. Until conversion they are not shares—your cap table should treat them as a future dilution event, not issued stock.
Notes carry terms such as principal, interest (if any), discount, valuation cap, and maturity. Scenario modeling shows ownership as if notes convert under different round sizes and prices.
Do not list noteholders as common shareholders before conversion. When the note converts, new shares appear and percentages change—your records should make that transition auditable.
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Related: What is a cap table? · How to read a cap table · SAFE agreements