Convertible note
A short-term loan that converts into equity at a future round — SAFE's older, debt-based cousin.
A convertible note is debt: it accrues interest and technically has a maturity date, but is designed to convert into equity at a future priced round rather than be repaid in cash. Before SAFEs existed, this was the standard early-stage instrument, and some investors and jurisdictions still prefer it because being structured as debt gives the holder a claim ahead of equity holders if the company fails.
Notes share the same core mechanics as SAFEs — a valuation cap and/or discount rate govern the conversion price — but add the legal complexity of a maturity date and interest rate, which can force an awkward renegotiation if the company hasn't raised a priced round by the time the note matures.
Why it matters
As an LP or angel, the practical economics of a note and a SAFE are often similar — what differs is your legal position if the company fails or stalls. A note gives you a creditor claim; a SAFE does not. Ask which instrument a deal uses and understand the difference before assuming they're interchangeable.