Business Pitch Dictionary by pitch.dog
Funding instruments & exemptions · Working

Convertible security

Also called: convertible instrument

ELI5

An investment that can change into another kind of security.

Used in conversation

“The convertible security converts at the next qualified financing.”

Definition

A security that can or must convert into another security under stated conditions.

Here “Convertible security” means: A security that can or must convert into another security under stated conditions.

Pitch context

You will see “Convertible security” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches funding instruments & exemptions.

Why it matters: In funding instruments & exemptions, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Sources & evidence · 5

Direct term-level sources and supporting source families.