What is a Convertible Loan Note (CLN)?

A CLN (or just ‘convertible note’) is a short-term debt instrument that allows investors to make a loan to your company and this loan either converts into shares of your company (typically at the next funding round) or is ‘redeemed’, which means that you repay the investment amount in full, with the agreed interest. SeedNOTE is our SeedLegals CLN. It used to be prohibitively expensive and complicated to raise capital by convertible debt, so we developed SeedNOTE as a simple and powerful tool for fundraising companies.

What is the difference between a SAFE and a CLN?

CLNs sometimes get confused with SAFEs as they are both agreements you make with investors that help you raise money before a funding round. The main difference between SAFEs and CLNs is that convertible notes are debt-equity (also known as quasi-equity) instruments while SAFEs are equity agreements. The convertible debt can be repaid in certain scenarios, and it can carry interest, while a SAFE (such as a SeedSAFE or a SeedFAST) is not repayable at all.

When should I use a SeedNOTE?

SeedNOTEs are useful if you want to raise funding without immediately determining your company valuation and without diluting existing shareholders. Some investors prefer convertible loan notes to straight equity investments because of the potential to earn interest and other investor protections

Why do some investors prefer convertible debt to equity investments?

Investors prefer convertible debt to equity investments because it gives them specific protections and a way to secure a discount on a future funding round: Earn interest CLNs and SeedNOTE typically come with interest, which the company pays to the investor. It’s a small but reliable way for the investor to get guaranteed value from their investment. Be more protected if things go wrong Because it’s considered a debt instrument before it’s converted, investors via SeedNOTE count as creditors. If your company is insolvent or going to liquidate or wind up, debt ranks higher than equity – so if there’s money available, creditors get paid (with interest) ahead of any shareholders. Hedge their bets With a SeedNOTE, if the company doesn’t meet its growth targets by raising a funding round, investors can get their money back plus interest. But if the company thrives, their loan converts to equity and they get a stake – often at a discounted price. It’s a win-win.

When do I need to issue equity to my investor?

It depends on what terms you choose for your agreement. Your SeedSAFE and SeedNOTE convert to equity either: - at the next funding round, or - when you raise above a preset qualifying amount, or - at the longstop or maturity date This is the date at which the agreement automatically converts if you don’t raise any more funds.

I have operations in the UK, can SeedLegals help?

Yes, absolutely. We offer a range of services in the UK and it can be more efficient to streamline your international operations through SeedLegals. Ask us for more information.

I have a UK investor and they’re asking me about SEIS/EIS relief...?

In the UK, the Enterprise Investment Schemes - SEIS and EIS - give generous tax breaks to investors in startups and scale-ups. If an investment in your company qualifies for SEIS or EIS, it can make you much more attractive to UK investors. . Our SeedFAST agreements aren’t classed as debt so they are SEIS and EIS compliant, as long as you include a longstop date no more than six months from when your investor gives you the funds (so the agreement converts to equity within the six months). SeedNOTEs aren’t compatible with SEIS or EIS because they’re classed as debt.

Raise Before a Round SeedNOTE

SeedNOTE, to easily convert debt to equity

SeedNOTE is a carefully constructed, simple and now incredibly popular form of convertible loan note - if investors are looking for repayment of their investment capital, interest or more complex deal terms then SeedNOTE convertible loan note is the way to go.

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Convertible loan notes for Singapore companies

Simplify a deal with complex terms

Convertible loan notes (CLNs) can be complex, but they don’t need to be complicated. Choose terms to create a SeedNOTE ideally suited to your fundraising.

Determine company valuation later
Convert at your next funding round
Choose to repay the loan or convert into equity on maturity

Customisable convertible loan notes

Create agreements your investors will love

Is your investor looking for a return of capital, interest or more complex deal terms? Our SeedNOTE convertible loan note is the way to go.

Offer investors interest and a discount
Add covenants or repayment triggers
Share, negotiate and sign online

Raise from multiple investors

Combine multiple investors in one agreement

Got more than one investor? Great! No need to create separate documents, with SeedNOTE you can add all investors to one agreement.

Follow the workflow to build your docs
Add multiple investors to the same SeedNOTE
Auto-generate all the supporting legal docs

Convertible loan notes made simple

Choose your terms

Follow the workflow to customise your convertible loan note

Decide company valuation later

Delay valuation until your round, give your company more time to grow

Seize every opportunity

Don’t wait to do a round - raise smaller amounts of capital as and when it’s available

Create, negotiate and sign

Sign and store your documents on SeedLegals

Auto-update your cap table

No need for spreadsheets

Sign Board and Shareholders Resolutions

To approve the new shares you’ll issue at the next round

Ask us anything

Get unlimited hours of support from our team every step of the way

Simplify your legals

Get your time back to spend more time doing what you love

How it works

Create your SeedNOTE

Follow the simple workflow to decide on the terms of the investment
Get all your docs in minutes

SeedLegals generates all key documents for the investment, ready to share and sign online
Receive your funds

After your investors sign, they transfers the money directly to you
Ask us if you need help

We’re here to help, every step of the way at no extra cost

Other ways to raise before a round

Looking for a more simple investment agreement?

For straightforward equity investments, use SeedSAFE, our simple agreements for future equity (SAFE).

Find out more about SeedSAFE

Unlimited help with your convertible loan note

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Need some help? Not sure how to get started? All our automated legals feature handy tutorials and hint text, and our helpful team of humans are here to guide you every step of the way.

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Perfect for complex one-off investments

SeedNOTE

Our full-featured convertible note. HK$6,990 to unlock, balance on completion. Pricing starts at HK$19,990 and is capped at HK$49,990, and includes free conversion into shares later.

From HK$19,990

How much will my SeedNOTE cost me?

What's included?

Term Sheet
SeedNOTE Convertible Loan Note agreement
Investor Consent Notice
Board & Shareholders Resolutions
Free conversion into shares later
Automatically updated cap table
Step-by-step wizard, hint text and tutorials
Share and sign everything on SeedLegals
Unlimited hours of support from our team

How it works

1
Subscribe to SeedLegals and create your company account
2
Create your SeedNOTE
3
Enter your investment details
4
Invite your investors to review and sign on SeedLegals
5
Your investors transfer you the funds directly

You'll need a SeedLegals subscription (HK$490/month or HK$4,990/year)

FAQs - SeedNOTE

Frequently asked questions about SeedNOTE

What is a Convertible Loan Note (CLN)?

A CLN (or just ‘convertible note’) is a short-term debt instrument that allows investors to make a loan to your company and this loan either converts into shares of your company (typically at the next funding round) or is ‘redeemed’, which means that you repay the investment amount in full, with the agreed interest.
SeedNOTE is our SeedLegals CLN. It used to be prohibitively expensive and complicated to raise capital by convertible debt, so we developed SeedNOTE as a simple and powerful tool for fundraising companies.
What is the difference between a SAFE and a CLN?

CLNs sometimes get confused with SAFEs as they are both agreements you make with investors that help you raise money before a funding round.
The main difference between SAFEs and CLNs is that convertible notes are debt-equity (also known as quasi-equity) instruments while SAFEs are equity agreements. The convertible debt can be repaid in certain scenarios, and it can carry interest, while a SAFE (such as a SeedSAFE or a SeedFAST) is not repayable at all.
When should I use a SeedNOTE?

SeedNOTEs are useful if you want to raise funding without immediately determining your company valuation and without diluting existing shareholders.
Some investors prefer convertible loan notes to straight equity investments because of the potential to earn interest and other investor protections
Why do some investors prefer convertible debt to equity investments?

Investors prefer convertible debt to equity investments because it gives them specific protections and a way to secure a discount on a future funding round:
Earn interest
CLNs and SeedNOTE typically come with interest, which the company pays to the investor. It’s a small but reliable way for the investor to get guaranteed value from their investment.
Be more protected if things go wrong
Because it’s considered a debt instrument before it’s converted, investors via SeedNOTE count as creditors. If your company is insolvent or going to liquidate or wind up, debt ranks higher than equity – so if there’s money available, creditors get paid (with interest) ahead of any shareholders.
Hedge their bets
With a SeedNOTE, if the company doesn’t meet its growth targets by raising a funding round, investors can get their money back plus interest. But if the company thrives, their loan converts to equity and they get a stake – often at a discounted price. It’s a win-win.
When do I need to issue equity to my investor?

It depends on what terms you choose for your agreement. Your SeedSAFE and SeedNOTE convert to equity either:
- at the next funding round, or
- when you raise above a preset qualifying amount, or
- at the longstop or maturity date
This is the date at which the agreement automatically converts if you don’t raise any more funds.
I have operations in the UK, can SeedLegals help?

Yes, absolutely. We offer a range of services in the UK and it can be more efficient to streamline your international operations through SeedLegals. Ask us for more information.
I have a UK investor and they’re asking me about SEIS/EIS relief...?

In the UK, the Enterprise Investment Schemes - SEIS and EIS - give generous tax breaks to investors in startups and scale-ups. If an investment in your company qualifies for SEIS or EIS, it can make you much more attractive to UK investors. .
Our SeedFAST agreements aren’t classed as debt so they are SEIS and EIS compliant, as long as you include a longstop date no more than six months from when your investor gives you the funds (so the agreement converts to equity within the six months).
SeedNOTEs aren’t compatible with SEIS or EIS because they’re classed as debt.

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