How do I convert a note?

When a note converts into a new round of financing, there are typically two transactions that you need to add to your account. These include a "Note Conversion" transaction and an "Interest Paid in Stock" transaction. You can also just record one Note Conversion transaction that includes the interest component within it if you do not care to separate them out for tax and accounting purposes. Either way, the instructions below will walk you through the steps to convert a note.

To record a Note Conversion: 

  • Before making any new entries, go to Current Investments by Round to verify that you have a current convertible note recorded for the company. For more information about the note, click the convertible note round name to see further details and to access additional tabs. If you invest under different investment accounts, then check the transactions under the Transactions tab to see under which investment account each note was made. Enterprise account holders can check the Investors tab and/or the Transactions tab to see the notes purchased by their investors and the associated investment accounts, plus they can easily export the data to then use in part with the import template to expedite note conversion entries.
  • Add a round for the stock series into which the note converted, if you haven't already done so. For example, if a note converted into Series A, then add the Series A round, including the date and share price of the round when it closed.
  • Add a transaction for the note conversion.
    • Select the Investor / Investment Account.
    • Select the Company.
    • Select the Round of Investment (the note round which is converting).
    • Select "Note Conversion" for the Transaction Type.
    • Enter the Date the note converted.
    • Enter the Number of Shares into which the note converted. If it's not clear from the company's investment documents or cap table, this can be calculated by taking the stock round's share price and applying the Discount % to obtain your adjusted share price. Then divide the amount of your note by the discounted share price to get your share count. 
    • If only part of the note converted, then enter the Principal Amount Converted, otherwise leave blank and the system will assume that the whole note converted.
    • Select the stock round into which the note converted as the New Round.
    • Enter the Share Certificate #, if you'd like.
    • Indicate if the investment is 1244 Qualified.
    • If your note has been entirely converted, then check the Exit Transaction box. If your note has been only partially converted, do not check the box.
    • Enter a Memo with any important notes related to the Transaction.
    • Save your entry.
  • Go to Current Investments by Round to verify that your note has been converted to the stock round. Enterprise accounts will need to update calculations to see the results.

Learn how to record Interest.

Please refer to our Convertible Note Checklist - Adding a Conversion Transaction for additional information.


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