Convertible Note
A loan that turns into equity at your next financing.
A short-term debt instrument that converts into equity at a future financing round, usually at a discount to the price new investors pay. An alternative to a SAFE, more common where investors want the note's debt-like protections (like a maturity date and interest).
- Business days
- 1–5Business days
- Lawyer reviewed
- 100%Lawyer reviewed
- Surprise bills
- $0Surprise bills
What a Convertible Note should include
Principal and interest — the amount, the rate, and whether interest converts or is repaid.
Maturity date — when the note comes due if no financing has happened.
Conversion terms — the cap, any discount, and what triggers conversion.
Maturity outcomes — what happens at maturity — repayment, extension or conversion.
Ranking — where the note sits relative to other debt.
Treatment on a sale — whether the investor takes repayment or a multiple.
When you need one
When an investor wants the speed of a convertible instrument but with debt protections attached — a maturity date and interest. The maturity date is the real difference from a SAFE: it is a date on which the company may owe money back.
How Ruby drafts it
Tell us what you need
Describe the agreement, your business context, and how fast you need it. A few smart questions, not a legal questionnaire. Your price and turnaround are confirmed before anything starts.
Ruby drafts it
Once pricing is confirmed a qualified Ruby lawyer is assigned to your file, and the first draft is built from your answers and real Canadian statute.
A licensed lawyer reviews every line
A lawyer licensed in Canada reviews and finalizes the document before it reaches you, and writes the plain-language summary that comes with it.
Signed, stored, and yours to revisit
You get the final agreement and its summary, stored so you can come back to it rather than hunting through email for the current version.
The fee is set before any of that starts. Hourly billing moves as scope does; a flat fee is one number, confirmed in writing, that doesn’t change after the work is done. See how Ruby prices agreements.
Or did you mean one of these?
These get confused with a Convertible Note often enough to be worth ruling out before you buy the wrong document.
Questions people ask
A SAFE is simpler and has no maturity date or interest, which suits the company. A note gives the investor a repayment date and a return if no financing happens, which suits the investor. Which is achievable usually comes down to who has the leverage.
Whatever the note says — commonly repayment, an extension by agreement, or conversion at a set valuation. It is worth reading before you need it, because the answer arrives at the least convenient moment.
It is a loan until it converts, and it is treated as such. That has consequences for how the company looks to other lenders and for what happens if the company runs out of money before converting.
Looking for the plain definition rather than the document? See Convertible Note in the Ruby legal glossary.
This page is general information about Canadian business law and is not legal advice. Laws differ by province and change over time, and how they apply depends on your circumstances. For advice on your situation, speak with a lawyer licensed in your province.
Need a Convertible Note?
Ruby drafts it for a flat $799 CAD, confirmed before any work begins, with a licensed Canadian lawyer on every document.