Convertible Note

Definition

A loan that converts into equity during a future funding round, allowing investors and founders to avoid the uncomfortable conversation about what the company is actually worth. It's a financial IOU wrapped in optimism and legal jargon.

Example Usage

"We raised $500K through convertible notes, which means we borrowed money that turns into ownership when someone smarter than us figures out our valuation."

Related Terms

Intermediate

flat round

A financing round raised at the same valuation as the previous round, suggesting a company has neither advanced nor declined—essentially treading water while burning cash. More diplomatically acceptable than a down round but almost as concerning to investors.

🚀 Startup / VC

Beginner

innovate

The corporate buzzword for 'doing something new' that appears in every mission statement and keynote presentation. To innovate is to revolutionize or introduce novelty, though in practice it often means adding an app to something that worked fine without one. Companies that claim to innovate daily are usually just iterating on someone else's idea with a slightly different shade of blue.

🚀 Startup / VC

Advanced

greenshoe option

A provision in IPO underwriting allowing underwriters to sell additional shares if demand exceeds expectations, typically up to 15% more. Named after the first company to use it, because finance people hate straightforward names.

🚀 Startup / VC

Advanced

equity kicker

Warrants or stock options added as sweetener to a debt deal, giving lenders upside if the company succeeds. Because apparently charging interest isn't enough—they want a piece of the action too.

🚀 Startup / VC

Beginner

CAC

Customer Acquisition Cost—how much you spend in sales and marketing to land one customer. VCs compare this to lifetime value to determine if your business model is actually viable or just an expensive hobby.

🚀 Startup / VC

Intermediate

pirate metrics

The AARRR framework measuring Acquisition, Activation, Retention, Referral, and Revenue—the key metrics for growth-stage startups. Named because AARRR sounds like a pirate, which is somehow still funny to founders.

🚀 Startup / VC

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