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Convertible Note Conversion Calculator

Enter your note terms to see how many shares it converts into.

How it is calculated

The tool compares two possible conversion prices and uses the lower one, because a lower price gives the investor more shares. The cap price is valuation cap ÷ fully diluted shares; the discount price is next-round price × (1 − discount ÷ 100). Then shares = investment ÷ conversion price. The result shows the shares, the conversion price in dollars, and a note saying whether the cap or the discount set the price, with the effective discount against the next-round price. The discount must be at least 0 and below 100, and investment, cap, round price and share count must be above zero; otherwise no result appears. If the two prices are exactly equal, the note names the cap. There is no interest field, so add any accrued interest to the investment yourself. Real notes differ in how they define the cap and share count, so follow your own agreement.

Worked example

A 100,000 note has a 4,500,000 cap and a 20% discount. The next round is priced at 1.50 per share and there are 5,000,000 fully diluted shares. Cap price = 4,500,000 ÷ 5,000,000 = $0.90. Discount price = 1.50 × 0.80 = $1.20. The lower price, $0.90, wins, so the cap drives the conversion. Shares = 100,000 ÷ 0.90 = 111,111 shares. The tool's note reads effective discount vs next round 40.00%, double the stated 20%.

Try this example →

Common mistakes

  • Entering the pre-money valuation of the new round as the cap, or a per-share figure as the cap. The cap is a total company value; the tool divides it by the share count itself.
  • Using shares outstanding instead of fully diluted shares. Options, warrants and the option pool change the cap price, so the count must follow your note's wording.
  • Forgetting accrued interest: the tool converts only the investment you type, so you must add the interest.
  • Typing the discount as 0.20 instead of 20. A value of 0.2 means a 0.2% discount, and 100 is refused.
  • Applying the discount to the cap price. Here the discount applies to the next-round price only, and the better of the two prices is chosen.

About this calculator

A convertible note is startup debt that converts into equity at a future priced funding round rather than being repaid in cash. Two terms typically protect the early investor: a valuation cap (a ceiling on the company valuation used to price their shares, however high the new round prices) and a discount rate (a percentage off the new round's price per share). This calculator computes the effective conversion price under both mechanisms and takes whichever gives the investor more shares — the "better of" outcome — then divides the amount you enter by that price to get the share count. It does not add interest on its own: if the note has accrued interest, add it to the principal before you enter the amount.

Startup founders, angel investors, and startup lawyers use this calculation when a priced Series A or later round closes and outstanding notes need to convert, since getting the cap-versus-discount comparison right directly determines how much of the company early investors end up owning and how much the founders' stake gets diluted.

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Comments (1)

  • Editorial team

    Which term wins depends on where the round is priced. With a 5000000 cap on 10000000 shares, the cap price is 0.50. If the round is priced at 2.50 the cap wins and 100000 converts into 200,000 shares; if it is priced at 0.60, the discount price of 0.48 is lower and the same note gives 208,333 shares. Check that your note's cap uses the share count your agreement names. What does your note's wording say about that count?

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