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A Convertible Loan Note lets startups raise money now while delaying the tricky question of company valuation until later. It starts as a loan but can transform into shares when specific events occur, like a major investment round or company sale. Under Dutch law, these notes have become popular with early-stage companies and investors because they're faster and simpler than traditional equity deals.

The loan typically converts to shares at a discount compared to the next investment round's price, rewarding early investors for their risk. Dutch companies often structure these notes through a 'converteerbare lening' agreement, which must comply with local corporate and financial regulations, including rules about interest payments and shareholder rights.

Consider a Convertible Loan Note when your startup needs quick funding but you can't agree on a valuation yet. It's particularly useful for Dutch tech companies in their early stages, where rapid growth makes accurate valuation challenging. This tool helps bridge the gap between initial seed funding and your first major investment round.

This financing method works well when you need to move fast - like grabbing a market opportunity or keeping operations running while negotiating with larger investors. Dutch entrepreneurs often use these notes to raise €50,000 to €500,000 from informal investors, avoiding complex shareholder agreements and lengthy valuation discussions in the crucial early stages.

• Basic Interest-Bearing Notes: Standard Dutch convertible loans charging 4-8% annual interest, converting at a 15-25% discount during qualifying funding rounds
• Simple Agreement for Future Equity (SAFE): Interest-free notes popular among tech startups, following Silicon Valley models but adapted for Dutch law
• Capped Convertibles: Notes with maximum conversion values, protecting early investors from dilution in high-value rounds
• Bridge Notes: Short-term convertibles designed to fund companies until their next major investment round, typically with strict maturity dates
• Revenue-Share Convertibles: Innovative structures where repayment links to company revenue until conversion or maturity

• Startup Founders: Use these notes to secure early-stage funding without immediately diluting their ownership or setting a firm valuation
• Angel Investors: Provide initial capital through convertible notes, often gaining favorable terms for future equity conversion
• Dutch Legal Counsel: Draft and review the agreements to ensure compliance with local corporate law and protect both parties' interests
• Financial Advisors: Help structure the terms, including interest rates, conversion discounts, and valuation caps
• Corporate Accountants: Handle the tax implications and booking of convertible notes in company financial statements

• Investment Terms: Determine loan amount, interest rate, and maturity date - typical Dutch rates range from 4-8% annually
• Conversion Triggers: Define qualifying funding rounds, sale events, or other circumstances that will trigger conversion to equity
• Company Details: Gather current capitalization table, articles of association, and chamber of commerce registration
• Investor Information: Collect KYC documentation and confirm investor's qualification under Dutch financial regulations
• Valuation Parameters: Set discount rate and valuation cap for future conversion events
• Documentation Review: Use our platform to generate a legally-sound note that meets Dutch corporate law requirements

• Parties' Details: Full legal names, addresses, and registration numbers of both company and investor
• Loan Terms: Principal amount, interest rate, and maturity date in compliance with Dutch usury laws
• Conversion Mechanics: Detailed triggers, pricing formulas, and share class specifications
• Security Provisions: Any collateral arrangements or subordination terms under Dutch security law
• Default Clauses: Clear definitions of events of default and remedies available
• Governing Law: Explicit statement of Dutch law application and jurisdiction
• Shareholder Rights: Post-conversion voting and dividend rights alignment with Dutch corporate law

Convertible Loan Notes are often confused with Loan Agreements in the Dutch market, but they serve distinctly different purposes. While both involve lending money, their core mechanisms and outcomes differ significantly.

• Conversion Rights: Convertible Loan Notes automatically transform into equity under specified conditions, while standard Loan Agreements remain debt until repaid
• Interest Treatment: Loan Agreements require regular interest payments, but Convertible Notes typically accrue interest until conversion
• Investment Intent: Convertible Notes aim for future equity ownership, whereas Loan Agreements focus purely on debt repayment
• Documentation Complexity: Loan Agreements are generally simpler, focusing on repayment terms, while Convertible Notes must address complex conversion mechanics and future shareholder rights
• Regulatory Framework: Under Dutch law, Convertible Notes face additional securities regulations that don't apply to standard loans