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A Convertible Agreement lets early-stage Dutch companies raise funds by offering investors the right to convert their initial investment into equity shares later. It works like a loan that can transform into company ownership, typically when specific events happen, such as a major funding round or company sale.

Under Dutch corporate law, these agreements help startups get quick funding without immediately setting a company valuation. Investors usually receive a discount on future share prices and sometimes get a valuation cap as protection. The conversion terms must comply with Dutch private company (BV) regulations, especially regarding share issuance and transfer restrictions.

Convertible Agreements work best for Dutch startups that need quick funding but aren't ready to set a firm company valuation. They're particularly valuable when you're in talks with angel investors or planning a larger funding round within 12-18 months. The flexibility helps both sides move forward without getting stuck on complex valuation discussions.

These agreements shine during your company's early growth phase, especially when you need bridge financing between major investment rounds. They're also perfect when dealing with multiple small investors, as the standardized terms make the process more efficient. Just ensure your company's articles of association allow for future share issuance under Dutch corporate law.

• Basic convertible loan with a standard 20% discount on future share prices - most common in Dutch tech startups
• Convertible with both discount and valuation cap - offers extra investor protection in high-growth scenarios
• Interest-bearing convertible notes - includes periodic interest payments until conversion
• Simple Agreement for Future Equity (SAFE) style convertibles - adapted to Dutch law, with simplified terms
• Bridge financing convertibles - specifically structured for short-term funding needs with clear maturity dates

• Startup Founders: Draft and negotiate these agreements when seeking flexible early-stage funding without immediate valuation
• Angel Investors: Provide capital through Convertible Agreements, often preferring them for quick deployment and future upside potential
• Corporate Lawyers: Structure and review the agreements to ensure compliance with Dutch corporate law and protect both parties' interests
• Company Directors: Must approve and execute the agreements as official representatives of the BV (private limited company)
• Notaries: Often involved in documenting and registering conversion events when notes transform into equity

• Company Details: Gather current shareholding structure, articles of association, and any existing investor agreements
• Investment Terms: Define investment amount, discount rate, valuation cap, and interest rate (if applicable)
• Conversion Triggers: Specify qualifying financing rounds, exit events, or maturity dates that activate conversion
• Shareholder Rights: Outline voting rights, information rights, and anti-dilution provisions post-conversion
• Legal Validation: Our platform generates compliant Dutch convertible agreements, ensuring all mandatory elements align with local corporate law
• Board Approval: Prepare documentation for board resolution approving the convertible note issuance

• Party Details: Full legal names and addresses of the company and investor(s), plus KvK numbers
• Investment Terms: Principal amount, conversion discount, valuation cap, and any interest calculations
• Conversion Mechanism: Detailed triggers, calculation methods, and share class specifications
• Maturity Date: Clear timeline and repayment terms if conversion hasn't occurred
• Governing Law: Explicit reference to Dutch law and jurisdiction
• Information Rights: Investor's access to company information and financial reports
• Anti-dilution: Protection mechanisms for subsequent funding rounds
• Transfer Rights: Rules for assignment or transfer of conversion rights

A Convertible Agreement differs significantly from a Bond Issuance Agreement in several key aspects, though both are instruments for raising capital. While convertible agreements offer flexibility and future equity potential, bond issuance agreements create fixed debt obligations with predetermined repayment terms.

• Risk and Return Structure: Convertible agreements offer investors potential equity upside, while bonds provide fixed interest payments and principal repayment
• Legal Classification: Convertibles exist in a hybrid space between debt and equity under Dutch law, whereas bonds are purely debt instruments
• Documentation Requirements: Bond issuance needs more extensive documentation and often requires regulatory approval, while convertibles are typically more straightforward
• Target Investors: Convertibles attract early-stage investors seeking growth potential, while bonds appeal to conservative investors seeking fixed returns