Conversion Discount

A percentage reduction from the priced round's share price at which a convertible note or SAFE converts into shares.

Example

A 20% discount on a 1.00 Series A price gives a conversion price of 0.80.

Where both a cap and a discount apply, the holder usually receives whichever gives the lower price.

Convertible Note — A short-term debt instrument that converts into equity at a future financing round, carrying interest and a maturity date, unlike a SAFE.
Valuation Cap — The maximum company valuation a SAFE or convertible note's conversion price can be based on, protecting the early investor from paying a later round's higher price.
SAFE (Simple Agreement for Future Equity) — A contract that gives an investor the right to receive shares in the future, at a price set by a formula, rather than issuing shares immediately. It is not debt and carries no interest or maturity date.

Ask what the bridge is a bridge to — A bridge round is short-term funding to reach a milestone or a larger round. Whether it is a sign of strength or of trouble depends on what specifically it is meant to reach, and whether anyone new is willing to fund it. (11 min)
A SAFE is a promise of future shares, and post-money SAFEs stack on the founders — A SAFE gives an investor the right to shares at a future priced round, usually at a valuation cap. With post-money SAFEs, each additional SAFE dilutes the founders rather than earlier SAFE holders. (12 min)
A convertible note is a loan that usually becomes shares, at the better of two prices — A convertible note is debt that converts into equity at a future round, typically at the lower of a discounted price or a capped price, with interest added to the amount converting. (12 min)