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A Convertible Agreement lets early-stage companies raise funds now while delaying the tricky task of setting a company valuation. Under NZ securities law, it's a binding contract where investors provide money that later converts into shares - usually when the company does a larger funding round or reaches specific milestones.

These agreements are popular with Kiwi startups because they're faster and cheaper than issuing shares right away. The investor's money typically converts at a discount to the next funding round's share price, rewarding them for getting in early. Some agreements also include a valuation cap to protect investors if the company's value skyrockets.

Use a Convertible Agreement when your startup needs quick capital but you're not ready to set a firm company valuation. This works especially well for early-stage Kiwi companies raising their first round of external funding, typically between NZ$50,000 and $500,000.

These agreements make the most sense during rapid growth phases when your valuation might change significantly before the next major funding round. They're also ideal when you need to close deals quickly with multiple investors, as they require less negotiation than traditional share issues and help avoid complex Financial Markets Conduct Act compliance requirements.

• Standard Convertible Notes: The most common type in NZ, featuring a basic discount rate and maturity date
• Capped Convertible Notes: Include a maximum valuation cap to protect investors if company value soars
• SAFE Agreements: Simpler convertible instruments without interest or maturity dates, gaining popularity with tech startups
• Interest-Bearing Notes: Traditional convertible notes that accrue interest until conversion
• Bridge Notes: Short-term convertible agreements designed to fund companies until their next major capital raise

• Startup Founders: Create and sign these agreements when seeking early-stage funding without setting a firm valuation
• Angel Investors: Provide capital through Convertible Agreements, often as part of a broader investment portfolio
• Corporate Lawyers: Draft and review agreements to ensure compliance with NZ securities laws and protect client interests
• Company Directors: Approve and execute agreements as part of their governance responsibilities
• Investment Advisors: Guide clients on terms and help negotiate key provisions like discount rates and caps

• Company Details: Gather your company registration number, director details, and current shareholding structure
• Investment Terms: Decide on investment amount, discount rate, and valuation cap (if applicable)
• Conversion Triggers: Define specific events that will trigger conversion into shares
• Investor Information: Collect full legal names, addresses, and investment amounts for each participant
• Timeline Details: Set clear maturity dates and any interim milestones or reporting requirements
• Documentation: Our platform generates legally compliant Convertible Agreements, ensuring all essential elements are included

• Investment Terms: Clear statement of investment amount, discount rate, and any valuation cap
• Conversion Mechanics: Detailed process for converting the investment into shares
• Qualifying Events: Specific triggers that initiate conversion, like equity financing rounds
• Maturity Provisions: Terms covering repayment or conversion if no qualifying event occurs
• Investor Rights: Information rights and any special privileges granted to investors
• Company Representations: Key warranties about company status and authority to enter agreement
• Governing Law: Explicit statement that NZ law applies and jurisdiction for disputes

Convertible Agreements are often confused with Asset Purchase Agreements, but they serve fundamentally different purposes in raising capital and transferring business value. Let's explore the key differences:

• Investment Structure: Convertible Agreements provide future equity rights, while Asset Purchase Agreements facilitate immediate transfer of specific business assets
• Timing of Valuation: Convertible Agreements delay valuation until a future event, whereas Asset Purchase Agreements require immediate asset valuation
• Risk Profile: Convertible investments carry uncertainty about future share price and conversion terms, while asset purchases have clear, immediate ownership transfer
• Documentation Complexity: Convertible Agreements are typically shorter and more flexible, compared to the detailed asset schedules and warranties in purchase agreements
• Regulatory Requirements: Convertible Agreements focus on securities law compliance, while Asset Purchase Agreements emphasize transfer of title and liability provisions