Convertible Note Calculator

Work out the principal, accrued interest and conversion ownership of a convertible note.

About Convertible Note Calculator

Convertible notes accrue interest that converts into equity rather than being repaid, so the amount converting is larger than the cash invested. Applying the discount to the cap gives the effective valuation and therefore the ownership. Eighteen months of accrued interest at 6% adds 9% to the converting amount, which is real dilution founders rarely include in their cap table model.

Formula

Convertible Note

Conversion amount = principal + principal × rate × months ÷ 12

accrued interest: Interest added to principal rather than paid in cash
cap: Ceiling valuation at which the note converts

Worked example

With the default values below, Convertible Note Calculator returns Amount Converting of $545,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Note principalminimum 0: 500,000
Annual interest rateaccepts 0–100 %: 6 %
Months outstandingaccepts 0–120 months: 18 months
Valuation capminimum 0.01: 8,000,000
Discount to the priced roundaccepts 0–100 %: 20 %

Results

Amount Converting: $545,000.00
Accrued Interest: $45,000.00
Ownership at the Cap: 8.516%
Effective Conversion Valuation: $6,400,000
Interest as Share of Conversion: 8.26%

Step by step

1Values used
2Convertible Note
3Amount Converting= 545,000.00
4Accrued Interest= 45,000.00
5Ownership at the Cap= 8.516
6Effective Conversion Valuation= 6,400,000
7Interest as Share of Conversion= 8.26

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Convertible Note calculated?

Conversion amount = principal + principal × rate × months ÷ 12 Convertible notes accrue interest that converts into equity rather than being repaid, so the amount converting is larger than the cash invested. Applying the discount to the cap gives the effective valuation and therefore the ownership.

Why does Convertible Note matter?

Eighteen months of accrued interest at 6% adds 9% to the converting amount, which is real dilution founders rarely include in their cap table model.

What values do I need to enter?

This calculator takes 5 inputs: Note principal, Annual interest rate, Months outstanding, Valuation cap, Discount to the priced round. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.