Convertible Promissory Note Kit

 

Raise Capital with Debt that Protects Your Cap Table.

Download the 2026 Convertible Promissory Note Kit.

Includes Shadow Preferred Stock, Subordination Logic, and 409A Compliance.

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Not every investor wants a SAFE.
While SAFEs are popular, many traditional Angel Groups and Institutional Investors require a Convertible Note. They want the security of a debt instrument (with a Maturity Date and Interest Rate) before they wire the funds.

The Hidden Trap in Standard Notes:
Most free Convertible Note templates are dangerous for Founders. When they convert into equity, they often grant investors "Liquidation Preferences" that are mathematically broken. This forces you to issue "Super-Shares" that can block your future funding rounds or dilute your voting power.

The Legal Attorney 2026 Master Note fixes this. It uses a sophisticated mechanism called "Shadow Preferred Stock" to ensure that when the debt converts, it aligns perfectly with your Series A investors without destroying your cap table.

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Why this is the "2026 Edition":

1. Shadow Preferred Stock Logic
   This is the gold standard for venture debt. Instead of converting into standard Series A stock, this Note converts into a "Shadow Series." This preserves the correct liquidation stack, ensuring Founders don't get crushed by math errors during an exit.

2. Bank-Ready Subordination
   Startups often need Venture Debt (loans) from banks like Mercury or Brex later on. Banks won't lend to you if your Angel Notes block them. Our contract includes a pre-written Subordination Clause, allowing you to take on bank loans without renegotiating with your angels.

3. Token/Web3 Future Proofing
   Even if you aren't a crypto company today, you might be tomorrow. Section 3 includes a "Token Event" clause, ensuring that if you issue tokens, the Note holders get their fair share without suing you for breach of contract.

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What You Get Inside the Kit:

I. The 2026 Master Convertible Note (Word)
A comprehensive, debt instrument.

1. Interest Rate & Maturity: Fully customizable fields to set your terms (e.g., 8% Interest, 24-Month Maturity).

2. Discount & Cap: Includes logic for both "Valuation Cap" and "Discount Rate" conversions.

II. The Founder’s Implementation Guide (PDF)

1. Interest Rate Guide: How to check the IRS "AFR" rates to ensure you don't accidentally create a tax liability.

2. Maturity Strategy: Why you should always ask for 24 months instead of 12.

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Secure Your Funding.

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Frequently Asked Questions

1. What is the difference between this and a SAFE?
   A SAFE is not debt; it has no interest rate and no maturity date. A Convertible Note is debt. It accrues interest and has a deadline (Maturity Date) where the money technically becomes due. Some conservative investors prefer Notes because they feel safer.

2. What happens at the Maturity Date?
   If you haven't raised a Series A by the Maturity Date, this Note gives you the option to convert them into Equity automatically (at the Cap price), so you don't have to bankrupt the company to pay back the cash.

3. Do I need a lawyer?
   This document handles the contract, but because this is a Security, you still need to file Form D with the SEC after you raise the money. We recommend using this template to negotiate the deal and then having a lawyer handle the SEC filing.

4. What is "Shadow Preferred" stock?
   It is a mirror image of your Series A stock, but with a different "Liquidation Preference" per share. It ensures that early investors don't get paid out more than new investors just because they got a discount. It is essential for keeping your Series A lead investor happy.