��������Ƶ

A Convertible Loan Note lets investors lend money to a startup with the option to convert their loan into company shares later on. It's particularly popular among Irish early-stage companies who need quick funding but aren't ready to set a firm company valuation yet.

When certain events happen, like a major funding round or company sale, the loan typically converts to equity at a pre-agreed discount. This gives investors the security of a loan with the potential upside of equity ownership, while companies benefit from simpler paperwork and more flexible terms than traditional share issues under Irish company law.

Use a Convertible Loan Note when your startup needs quick funding but you can't agree on a company valuation yet. This tool works especially well for Irish tech companies raising their first round of investment, typically between €50,000 and €500,000, before a formal Series A.

The timing is perfect when you need capital quickly, want to postpone complex valuation discussions, and prefer to keep your cap table clean. Many Irish founders choose this route during bridge funding rounds or when bringing in strategic investors who might later lead a larger investment round. It's also ideal when dealing with multiple small investors in a funding round.

• Basic Convertible Loan Notes: Common in Irish tech startups, featuring standard interest rates and conversion discounts
• Capped Notes: Include a maximum valuation cap to protect investors during high-growth scenarios
• Interest-Free Notes: Used for short-term bridges between funding rounds, focusing purely on equity conversion
• Multiple-Trigger Notes: Convert based on various events like funding rounds, exits, or specific milestones
• Discount-Only Notes: Offer conversion discounts without valuation caps, popular among early-stage Irish companies

• Startup Founders: Issue Convertible Loan Notes to raise quick capital without immediate valuation discussions
• Angel Investors: Provide early-stage funding while securing potential equity stakes at favorable terms
• Corporate Lawyers: Draft and review note terms, ensuring compliance with Irish company law
• Company Directors: Approve and execute the notes as part of their corporate governance duties
• Investment Funds: Use notes for bridge financing or as part of larger investment strategies
• Company Secretary: Maintains official records and manages regulatory filings related to the notes

• Company Details: Gather current share structure, company registration number, and director details
• Investment Terms: Define loan amount, interest rate, and maturity date
• Conversion Mechanics: Decide on discount rate, valuation cap, and qualifying funding round size
• Security Status: Determine if the note will be secured against company assets
• Board Approval: Ensure proper authorization under your company's constitution
• Investor Information: Collect all investor details and verify their status under Irish investment laws
• Documentation Review: Use our platform to generate a legally-sound note that includes all required elements

• Loan Terms: Principal amount, interest rate, and repayment schedule clearly stated
• Conversion Rights: Detailed triggers, share class, and conversion price calculations
• Company Details: Full legal name, registration number, and registered office address
• Investor Information: Complete identification and contact details of all note holders
• Default Provisions: Consequences and remedies for missed payments or breaches
• Security Status: Clear statement on secured or unsecured status of the note
• Governing Law: Explicit reference to Irish law and jurisdiction
• Amendment Terms: Procedures for modifying note terms with noteholder consent

A Convertible Loan Note differs significantly from a Loan Agreement in several key aspects, particularly in the Irish legal context. While both involve lending money, their structures and purposes serve different business needs.

• Primary Purpose: Convertible Loan Notes aim to convert debt to equity in future funding rounds, while Loan Agreements focus solely on debt repayment
• Interest Treatment: Convertible Notes often have interest that converts to equity alongside the principal, whereas Loan Agreements require regular interest payments
• Default Mechanisms: Loan Agreements typically trigger immediate repayment on default, while Convertible Notes might offer alternative remedies like forced conversion
• Documentation Complexity: Convertible Notes include specific conversion mechanics and triggers, making them more complex than standard Loan Agreements
• Target Users: Convertible Notes are primarily used by startups and investors, while Loan Agreements serve broader commercial lending purposes