Document background
The Convertible Promissory Note is a fundamental financing instrument in New Zealand's startup ecosystem, bridging the gap between debt and equity financing. It is typically used when a company needs immediate funding but determining an accurate company valuation is challenging or premature. The document provides a mechanism for investors to loan money to a company with the right to convert their investment into equity shares, usually at a discount to the next qualified financing round. This type of agreement is particularly valuable for early-stage companies in New Zealand seeking to raise capital while deferring valuation discussions, and it must comply with New Zealand securities laws and financial regulations. The document includes essential terms such as the conversion mechanism, interest rate, maturity date, and various investor protections, all structured within the framework of New Zealand commercial law.
