Convertible Note Term Sheet
A convertible note term sheet is a preliminary document outlining principal economic and conversion terms for a convertible loan investment, typically non-binding except for exclusivity or confidentiality. Use this when a startup and angel investors agree on headline terms for a convertible note round before counsel drafts definitive documents. It covers cap, discount, interest, maturity, and qualified financing triggers.
What's included
A ready-to-use convertible note term sheet covering principal amount and investor allocation, interest rate and maturity date, valuation cap and/or discount on conversion, with signature fields already placed for Company and Investor. Fill in the bracketed details (like [Company Name] or [Date]) using Docracy's built-in text editor, then send it out for signature.
This is a general template for informational purposes only and does not constitute legal advice. Consult a qualified attorney to review it for your specific situation and jurisdiction before use.
Key clauses
- Principal amount and investor allocation
- Interest rate and maturity date
- Valuation cap and/or discount on conversion
- Qualified financing threshold triggering conversion
- Change-of-control and repayment treatment
- Most-favored-nation and pro rata rights if any
What you'll fill in
[Company Name][Lead Investor Name][Total Round Size][Valuation Cap][Discount Rate][Interest Rate][Maturity Date]Legal summary
Signing a term sheet signals intent to invest on stated terms but usually does not obligate funding until definitive documents close. Investors should treat cap and discount mechanics as binding only in the final note.
Free for up to 2 signers, no account required. Need unlimited? Flat $10/month.
FAQ
Is this Convertible Note Term Sheet legally binding?
Signing through Docracy uses a simple electronic signature (SES), which is legally recognized for everyday business agreements under laws like the U.S. ESIGN Act and the EU's eIDAS regulation. This is a general template, not legal advice — for high-stakes or regulated agreements, have a qualified attorney review it for your situation.
Who needs to sign this Convertible Note Term Sheet?
This template includes signature fields for Company and Investor — already placed — plus 7 placeholder fields to fill in before you send it.
Can I edit this Convertible Note Term Sheet before sending it?
Yes — Docracy's editor lets you edit the text, add or remove signature fields, redact sections, and reorder pages before you send it.
Do I need an account to send this Convertible Note Term Sheet?
No — it's free for up to 2 signers with no account required. Create a free account only if you want to save it to a dashboard or reuse it later.
Try it with an AI assistant
Paste one of these into ChatGPT, Claude, or your assistant of choice:
“Fill this Convertible Note Term Sheet for a $500K round with a $6M cap and 20% discount.”
“Compare maturity extension vs automatic conversion on qualified financing.”
“Add an exclusivity clause expiring in 45 days.”
Why teams start with Docracy
“Docracy is a great product that I have tested and am using. It is easy to use, has good tools, is always up to date, and implements new features. Highly recommended.”— DACH Advisory
Free for up to 2 signers, no account required. Need unlimited? Flat $10/month.