CONVERTIBLE NOTES are debt instruments which provide for conversion of borrowed amounts into equity under certain circumstances. Some companies like them because convertible notes defer tough discussions about the value of the company when the loan is made and note deals can often be completed quickly. Others say “you must confront valuation anyway, so just do a small seed-stage round.” At a more subtle level, certain features and mechanisms of formal convertible debt documents can present unexpected (or even unseen) risks to the company or to the investor. As with many financing tools, the utility and desirability of a convertible debt depends largely on the details. There are many things to be considered in issuing or accepting convertible debt; they include provisions and structures relating to: term, interest rate, conversion, the “cap”, mandatory conversion, discounts on pricing, information rights, group voting, default provisions and others. There is no “one size fits all” with convertible debt; a careful analysis of the documents is required.