Convertible Note Term Sheet by Cofounders
Updated 6 November 2025
The Convertible Note Term Sheet outlines the key economic and structural terms for a proposed convertible note financing, including investment amount, interest, maturity, valuation cap, discount, conversion mechanics, and treatment upon sale of the company. It serves as a non-binding summary to guide negotiation prior to drafting the formal Convertible Note Purchase Agreement, and reflects standard early-stage financing practices commonly used in Singapore startup fundraising.
Convertible Note Term Sheet
The following is a summary of the basic terms and conditions of a proposed convertible promissory note financing of [company name], [company registration number], with registered address at [company address]. This term sheet is for discussion purposes only and is not binding on Company or the Investors (as defined below).
Issuer | [company name] (the Company) |
Financing Amount | Up to $1000000 SGD worth of convertible promissory notes (the Notes). |
Closings | The Company may close the sale of the Notes in one or more closings with one or more purchasers of the Notes acceptable to the Company (the Investors). |
Investment Amount | The amount invested by an Investor for the purchase of such Investor's Convertible Securities (the Investment Amount). |
Definitive Agreement | The Notes will be issued and sold pursuant to a convertible note purchase agreement prepared by the Company's legal counsel (the Note Purchase Agreement). |
Maturity Date | Principal and unpaid accrued interest on the Notes will be due and payable twenty-four (24) months from the date of the Note Purchase Agreement (the Maturity Date). |
Interest | Interest will accrue on an annual basis at the rate of 5% per annum based on a 365 day year. |
Qualified Financing | The issuing of Equity Securities in a transaction or series of related transactions resulting in aggregate gross proceeds to the Company of at least $1000000 SGD, including conversion of the Notes and any other indebtedness. |
Conversion Price | The Conversion Price is the lesser of 1) 75% of the per share price paid by the purchasers of such Equity Securities in the Qualified Financing (the Discounted Conversion Price), or 2) the price per share equal to $3500000 SGD divided by the aggregate number of outstanding shares of the Company's Common Stock as of immediately after the initial closing of the Qualified Financing (assuming full conversion or exercise of all convertible and exercisable securities then outstanding other than the Notes) (the Valuation Cap). |
Automatic Conversion | Automatic Conversion in a Qualified Financing. If the Company issues Equity Securities in a Qualified Financing, then the Notes, and any accrued but unpaid interest thereon, will automatically convert into the equity securities issued pursuant to the Qualified Financing at the Conversion Price. Automatic Conversion at the Maturity Date. If the Notes have not been previously converted pursuant to a Qualified Financing, then, effective upon the Maturity Date, the Notes, and any accrued but unpaid interest thereon, will automatically convert into Equity Securities at the Valuation Cap. |
Optional Conversion | If the Maturity Date or a Qualified Financing has not occurred, the Investor may elect to convert the entire Investment Amount into Equity Securities at the Valuation Cap. |
Sale of the Company | If a Qualified Financing has not occurred and the Company elects to consummate a sale of the Company prior to the Maturity Date, then upon the election of the Investor, either 1) the Investor shall receive a payment equal to one and half (1.5) times the Notes, or 2) the entire Investment Amount shall convert into Equity Securities at the Valuation Cap. |
Pre-Payment | The principal and accrued interest may not be prepaid unless approved in writing by Investors holding Notes whose aggregate principal amount represents a majority of the outstanding principal amount of all then-outstanding Notes (the Requisite Holders). |
Amendment and Waiver | The Note Purchase Agreement and the Notes may be amended, or any term thereof waived, upon the written consent of the Company and the Requisite Holders. |
No Security Interest | The Notes will be a general unsecured obligation of the Company. |
Investor Rights | The Investor will have customary information and inspection rights, including receiving an annual budget, annual unaudited financial statements, quarterly unaudited financial statements, and any other information reports prepared for shareholders while the Notes remains outstanding. |
Fees and Expenses | Each Investor will bear its own fees and expenses incurred in the transaction. |
About this template
What is this template?
Convertible Note Term Sheet by Cofounders is a free, ready-to-use Banking and finance template you can open, customize, and download on GitLaw. It gives you a professionally structured starting point, so you never have to draft from a blank page. The wording is plain and modern, organized into clear sections that are easy to read, edit, and adapt to your own situation before you share or sign it.
When should you use it?
Reach for this Banking and finance template whenever you need a reliable agreement quickly and want to be sure the essentials are covered. It suits individuals, freelancers, startups, and established businesses alike. Instead of paying for a document drafted from scratch, you can start here, tailor the details to your arrangement, and have a polished draft ready in minutes. This version is drafted with Singapore in mind, though you should always review the final wording against the laws that apply to you.
What's typically included?
A well-drafted Banking and finance usually sets out the parties involved, the scope of the agreement, and each side's rights and responsibilities. Expect sections covering key terms and definitions, how long the agreement lasts, how it can be ended, and what happens if something goes wrong. This template brings those building blocks together in a sensible order, so you can focus on the specifics rather than worrying about what to include. Open it to read the full document, then sign up to edit, negotiate, and e-sign it directly in GitLaw.