What is a Convertible Note Agreement?

It is used by startups, founders and early-stage investors who want the terms recorded before work starts or money changes hands, rather than reconstructed from memory afterwards. Putting it in writing is what turns an understanding into something either side can rely on.

18 details are captured across 6 areas: parties and contact details, scope and deliverables, payment and financial terms, dates, timing and duration, confidentiality and intellectual property, and legal protections and risk. Together they fix what the investor owes the company, measured in instalments rather than in adjectives.

Where these agreements go wrong, it is usually a conversion trigger that produces a number nobody expected rather than a defect in the boilerplate. Business agreements tend to fail at the edges — deadlock between owners, automatic renewals nobody diarised, and liability caps that turn out to sit above the value of the contract.

Fill in the form and the convertible note agreement assembles as you type, so you can read the finished wording before you download it. The draft is a starting point built on standard contract structure — it is not legal advice, and for a high-value or unusual arrangement it is worth having an attorney check it against the rules in your state.

What matters most in a convertible note agreement

Securities law applies

Issuing equity or convertible instruments is a regulated securities offering. Exemptions have conditions that must be met.

Information and consent rights

Investors commonly get reporting rights and a veto over specified major decisions. Keep the veto list workable for the founders.

Interaction with future rounds

Consider how the instrument behaves at the next financing, on a sale, and if no round happens before maturity.

When you need a convertible note agreement

  • When the parties are in different places: Naming the governing law and the forum in advance prevents a costly preliminary fight about where any dispute is even heard.
  • When the counterparty is new to you: With no track record between the parties, the written terms do the work that familiarity would otherwise do. That is exactly when precision pays for itself.
  • When a conversion trigger that produces a number nobody expected is a realistic prospect: If this is the way the arrangement usually goes wrong, it belongs in the document. Allocating that risk in advance is much cheaper than allocating it afterwards.
  • When either side may need an exit: Agree how the arrangement ends while both parties are still on good terms. Exit clauses negotiated during a dispute rarely favour anyone.
  • When ownership of the investment matters: State who owns what is produced and at what point ownership passes. Without an express written term, ownership usually stays with whoever created it.
  • When risk needs allocating: Decide who carries which risk and who insures it before an incident rather than after one. Afterwards, both readings of the silence are self-serving.

What to include in a convertible note agreement

This generator collects 18 details. Here is what each group covers and why it matters when the document is relied on.

Parties and contact details

Name the investor and the company as legal entities rather than as the people you deal with day to day. The individual you email is rarely the party that can be enforced against.

Company Name
The company's registered legal name, including its corporate suffix such as LLC, Inc or Ltd.
Company Address
The company's registered office or principal place of business.
Counterparty Name
The full legal name of the other party entering into this agreement.
Counterparty Address
The counterparty's address for formal notices.

Scope and deliverables

The description of the investment is what turns an extra request into a chargeable variation. Write it so that someone outside the arrangement could tell what is in and what is out.

Purpose of Agreement
Why the parties are entering into the agreement. This helps a court interpret ambiguous clauses in line with the parties' actual intent.
Products or Services
The goods or services supplied, identified by specification, model or catalogue reference.
Performance Standards
The measurable standard the work must meet — response times, quality levels or service metrics.

Payment and financial terms

Write key figures out in full and name the currency. Where the price depends on a count of instalments, record that count as you go rather than reconstructing it at invoice time.

Commercial Terms
The core business terms — volumes, discounts, rebates, minimum commitments and review points.
Pricing
The unit prices or rate card, plus how and when prices may be revised.
Payment Terms
The invoicing cycle, payment window, accepted methods and consequences of non-payment.
Limitation of Liability
The cap on each party's financial exposure. Note that liability for fraud, death or personal injury generally cannot be excluded.

Dates, timing and duration

Use calendar dates, not relative triggers. "On approval" cannot be located on a calendar, which means it cannot be used to show that anyone is late.

Effective Date
The date the agreement takes effect. This can differ from the signature date, and it is the date obligations start running from.
Delivery Timeline
Lead times and delivery windows, plus what counts as a late delivery and the remedy for it.

Confidentiality and intellectual property

State the territory, media, term and exclusivity of anything licensed. An unbounded licence is a transfer that was priced as a licence.

Confidentiality Obligations
The duty to keep information private, who it may be shared with internally, and the standard of care required.
Intellectual Property Rights
Who owns the IP created under the agreement, and what licence the other party receives.

Legal protections and risk

These are the clauses nobody reads until something goes wrong, at which point they are the only clauses that matter.

Warranties
The promises each party makes about quality, title and authority, and how long they last.
Termination Rights
The circumstances in which each party may end the agreement, distinguishing termination for convenience from termination for breach.
Governing Law
The legal system that applies and the courts that will hear any dispute.

Completing this convertible note agreement

Getting the numbers right

Write key figures out in full where the amount is central, and state the currency if either party is outside the country. Both are cheap precautions against an expensive misunderstanding on a convertible note agreement.

Reading it as the other side would

Before signing, read the convertible note agreement from the counterparty's position and look for anything you would exploit. If you find something, so will they.

Dates that drive obligations

Use calendar dates rather than relative triggers such as "on approval", which cannot be measured. Dates determine when obligations start, when they end, and when someone is late.

Making the counts checkable

Where the price depends on instalments, keep a contemporaneous record as they are delivered. A count reconstructed at invoice time invites a challenge that a running record would have prevented.

Checking the consents

Where a landlord, lender, insurer or licensing body has to approve the arrangement, obtain that approval before each conversion or repayment date rather than assuming it will follow as a formality.

Common mistakes to avoid

  1. Leaving confidentiality out. Both sides usually see something they should not repeat. A short confidentiality clause that expressly survives the end of the agreement covers it.
  2. Keeping no running record. Track what is actually delivered as you go, instalment by instalment. Reconstructing the position at invoice time invites a challenge that a contemporaneous record would have prevented.
  3. Late payment with no consequence. If nothing happens when the company pays late, late payment becomes the norm. Interest on overdue sums plus a right for the investor to suspend gives the clause teeth.
  4. Leaving out the governing law. Where the investor and the company are in different places, naming the law and the forum in advance avoids a preliminary fight about where the dispute is even heard.
  5. Skipping the notice details. Say where notices go, in what form, and when they count as received. Agreements fail at this point more often than at the clauses people actually negotiate.

How to use this convertible note agreement generator

  1. Fill in the form. Complete the 18 fields above. The investor and the company both need naming in full, and the investment should be described in enough detail that a stranger could tell whether it had been delivered. Nothing is sent to a server — the document is assembled in your browser.
  2. Read the preview. Scan the preview for anything left blank or approximate. Dates, amounts and the description of the investment are the entries that get tested.
  3. Download and sign. Take the PDF for signing or the Word version for further edits. Make sure the signed copy reaches everyone named, since a document held by only one side is hard to rely on.

Convertible Note Agreement — frequently asked questions

What is the difference between a SAFE and a convertible note?

A convertible note is debt: it carries interest, has a maturity date, and must be repaid or converted by then. A SAFE is not debt — there is no interest and no maturity, and it converts only if a triggering event occurs, which means it may never convert at all. SAFEs are simpler and founder-friendly; notes give investors the leverage of a repayment date. Both dilute, and both warrant legal advice.

Can a convertible note agreement be changed after signing?

Only by agreement, and the change should be recorded in writing and signed by both sides. Once amendments start being made by phone or in passing, the written document stops describing the arrangement, which defeats the purpose of having one.

When is a convertible note agreement treated as complete?

At each conversion or repayment date — but only if the document says what has to be true for that point to have been reached and who confirms it. Without a test, the investor considers the obligation discharged while the company is still waiting, and neither reading is unreasonable on the wording.

Which state's law should govern this convertible note agreement?

Choose a state with a genuine connection to the parties or the subject matter — where a party is based, or where the work or property is located. A choice with no connection at all may not be respected, and for property or employment the local state's rules will often apply regardless of what the contract says.

Who owns the work produced under this agreement?

Whoever the agreement says owns it — and if it says nothing, the creator generally does. Paying for work does not transfer copyright by itself. If ownership is meant to pass to the client, the assignment clause needs to say so expressly, and it is common to make the transfer conditional on payment in full.

How long do the confidentiality obligations last?

Ordinary commercial information is usually protected for a fixed period of two to five years after the agreement ends, while genuine trade secrets are often protected for as long as they stay secret. Whichever you choose, state expressly that the confidentiality clause survives termination — otherwise the protection ends with the contract.

Can liability be limited to any amount?

Within limits. Parties can cap ordinary commercial liability, and a cap set against contract value or insurance cover is normal. But liability for fraud, death and personal injury generally cannot be excluded, and a cap so low it makes the obligations meaningless may be struck down as unreasonable.

Does a business contract need to be signed by a director?

It needs to be signed by someone with authority to bind the entity. For a company that is typically a director or an officer with delegated authority; for an LLC, a manager or authorised member. If you are unsure, ask for evidence of authority before relying on the signature.