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A Convertible Loan Note lets early-stage companies get funding now while delaying the tricky task of setting a company value. It starts as a loan but can later turn into shares, typically when the company raises a bigger investment round or hits specific milestones.

Under Indonesian law, these notes offer flexibility for both startups and investors. The loan usually converts to equity at a discount from future valuations, giving early backers a better deal for taking initial risks. Many Indonesian tech startups use these notes during their seed funding stage, as regulated under OJK guidelines for innovative financial instruments.

Convertible Loan Notes work best when your startup needs quick funding but determining an accurate company valuation is challenging. They're particularly useful for Indonesian tech companies in pre-revenue stages or when rapid growth makes traditional valuation methods difficult.

These notes make sense during seed funding rounds, especially when you need capital within 1-3 months. Indonesian investors often prefer them for initial investments between IDR 500 million to 5 billion, as they offer protection through debt status while maintaining potential equity upside. They're also ideal when negotiating with multiple investors simultaneously, as they simplify early-stage fundraising paperwork.

• Standard Notes: Basic convertible loans with simple interest and a standard discount rate, commonly used by Indonesian tech startups for seed funding
• Capped Notes: Include a maximum conversion value to protect early investors from dilution during later funding rounds
• Interest-Free Notes: Popular among family offices and angel investors in Indonesia, converting only the principal amount to equity
• SAFE-Style Notes: Simplified convertible notes inspired by Y Combinator's SAFE agreement, adapted to comply with OJK regulations
• Milestone-Based Notes: Convert based on specific company achievements rather than just future funding rounds

• Startup Founders: Sign as company representatives and negotiate key terms like valuation caps and conversion triggers
• Angel Investors: Provide early-stage capital through these notes, often ranging from IDR 500 million to 2 billion
• Legal Counsel: Draft and review notes to ensure compliance with OJK regulations and Indonesian corporate law
• Company Directors: Authorize the note issuance and manage corporate governance requirements
• Venture Capital Firms: Use these notes for initial investments while deferring complex valuation discussions
• Corporate Secretaries: Handle documentation, filing, and maintaining records of conversion terms

• Company Details: Gather current company registration, shareholders' information, and board approvals
• Investment Terms: Define loan amount, interest rate, maturity date, and conversion discount percentage
• Valuation Cap: Set maximum company valuation for conversion purposes, typically based on market comparables
• Conversion Triggers: Specify qualifying funding rounds, exit events, or other conversion conditions
• Legal Requirements: Check OJK regulations and local corporate law compliance needs
• Documentation: Prepare shareholder resolutions and corporate secretary certifications
• Platform Usage: Use our system to generate a legally-sound note that includes all required elements

• Parties Section: Full legal names and details of the company and investor(s)
• Loan Terms: Principal amount, interest rate, and maturity date in compliance with OJK guidelines
• Conversion Rights: Detailed mechanics for converting debt to equity, including discount rates and caps
• Qualifying Events: Clear definitions of events triggering automatic or optional conversion
• Default Provisions: Consequences and remedies under Indonesian law
• Representations: Company's authority to issue the note and investor's sophistication status
• Governing Law: Explicit reference to Indonesian law and jurisdiction
• Execution Block: Proper signature format with company seal requirements

Convertible Loan Notes are often confused with Loan Agreements in Indonesia, but they serve distinctly different purposes in startup funding. While both involve lending money, their structures and outcomes differ significantly.

• Conversion Rights: Convertible Loan Notes automatically transform into equity shares upon triggering events, while standard Loan Agreements remain as debt until repayment
• Interest Treatment: Loan Agreements require regular interest payments, but Convertible Notes typically accrue interest until conversion
• Valuation Approach: Convertible Notes defer valuation discussions until later funding rounds, whereas Loan Agreements focus purely on repayment terms
• Investor Protection: Convertible Notes offer potential equity upside and conversion discounts, while Loan Agreements rely on traditional collateral and guarantees
• Regulatory Framework: Under OJK rules, Convertible Notes face different oversight than standard loans, particularly regarding equity conversion mechanisms