Convertible Note
Convertible notes with conversion terms that convert.
Draft convertible promissory notes for fundraising clients with qualified financing triggers, valuation caps, discount rates, and maturity provisions that bridge rounds without bridging disputes.
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The Attorney's Challenge with Convertible Notes
Venture attorneys draft multiple convertible notes during a single funding round, often for different investors with varying terms. Convertible notes defer the valuation question, but poorly drafted notes defer the dispute too. Ambiguous qualified financing thresholds leave founders and investors arguing about whether a round triggers conversion. Valuation caps without clear pre-money vs. post-money definitions create different expectations about dilution. JR3 drafts convertible notes that define each conversion mechanic precisely, so when the triggering event occurs, the math is clear and the conversion executes without disputes.
Note Drafting
From Bridge Terms to Binding Instrument
Describe your client's investment amount, cap, discount, and maturity timeline. JR3 drafts a convertible promissory note with precise qualified financing definitions, conversion mechanics that specify exactly how the math works, maturity provisions with defined consequences, and most favored nation clauses when appropriate. Review the terms, adjust conversion thresholds, and export a note ready for investor signature.
Valuation caps and discount rates
Pre-money or post-money cap definitions with clear dilution mechanics, discount percentages applied to the qualified financing price, and conversion at the lower of cap or discount
Qualified financing triggers
Precise definitions of what constitutes a qualified financing including minimum raise amount, equity type, and whether note proceeds count toward the threshold
Maturity and default provisions
Maturity date consequences including automatic conversion, repayment obligation, or extension options with defined terms for each scenario
Change of control and dissolution
Acquisition and dissolution provisions specifying repayment multiples, conversion rights, and payment priority relative to other noteholders and equity holders
Pre-seed bridge notes
Early-stage convertible notes with uncapped or high-cap terms, simple conversion mechanics, and founder-friendly maturity provisions.
Seed round bridge financing
Bridge notes between seed and Series A with valuation caps informed by traction, discount rates, and qualified financing thresholds tied to institutional round sizes.
Multi-investor note rounds
Multiple convertible notes issued on the same terms with most favored nation clauses, pro rata rights, and information rights for larger note holders.
Extension and amendment notes
Maturity extension amendments, cap adjustment provisions, and note modification agreements when original terms need updating before conversion.
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What Is JR3 and How Does It Draft Convertible Notes?
JR3 is an AI-centric document editing platform built for legal professionals, with specialized agents that understand convertible debt mechanics and the conversion scenarios that cause disputes. It drafts convertible promissory notes with precise valuation cap definitions, unambiguous qualified financing thresholds, clear conversion math, and maturity provisions with defined consequences. Attorneys using JR3 produce notes where every conversion scenario produces a deterministic outcome.
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Common questions
What is the difference between a convertible note and a SAFE?
A convertible note is debt that converts to equity — it accrues interest, has a maturity date, and creates a repayment obligation if conversion never triggers. A SAFE is not debt; it has no interest, no maturity date, and no repayment right. Convertible notes give investors more protection through the debt structure but add complexity with interest calculations and maturity negotiations. JR3 drafts both instruments and can help you choose based on your fundraising situation.
How do valuation caps and discounts work together?
What happens when a convertible note reaches maturity without a qualified financing?
Should a convertible note include a most favored nation clause?
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Close More Rounds Without More Hours
Draft convertible notes for fundraising clients with precise conversion mechanics, clear valuation caps, and defined maturity provisions — ready for investor signature in minutes.