# Convertible Note Calculator

The purpose of this convertible note calculator is to estimate the effect on the capitalization table of a business by triggering the conversion of a note payable when seeking additional equity investment.

A convertible note can be issued by a startup business to raise seed finance. The convertible note is effectively an interest bearing loan which is eventually repaid by the issue of new equity to the noteholder (lender), rather than being repaid in the usual manner with cash.

This topic is more fully discussed in our tutorial on convertible loan notes.

## Using the Convertible Note Calculator

The convertible note calculator assumes that the business has already issued a convertible note and is now at the stage where it is seeking additional outside equity investment.

The calculator is available for download below and is used as follows:

1. ### Enter Pre-money Details

Enter the number of existing shares and pre-money valuation of the business. These shares will typically have been issued to the founders of the business.

2. ### Enter the Convertible Note Details

Enter the amount, discount, and cap for the convertible note. The amount of the convertible note should include any accrued interest accumulated on the loan note since it was issued.

The calculator works out the conversion values based on both the discount and on the cap, and uses the maximum of these two values for the remaining calculations. Details of these calculations can be seen in our conversion loan notes tutorial.

3. ### Enter Investment details

Enter the amount of the additional equity investment being sought by the business. The calculator works out the post-money valuation of the business

4. ### Ownership

The convertible note calculator calculates the percentage shareholding, number of shares, and value held by the investor, noteholder, and founders of the business, following the conversion of the loan note and the injection of the additional investment.

5. ### Share Price

For additional information, the calculator also shows the share price paid by the investor and the noteholder. Due to the effect of the convertible note discount and cap, the price paid by the noteholder will usually be less that that paid by the investor. The calculator also shows the effective discount on the share price that the noteholder receives.