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A Convertible Agreement lets early-stage startups raise funds while postponing their company valuation. It works like an IOU that converts into shares later, usually during the next major funding round. Singapore startups often use these agreements when they're too new to set a fair market value but need quick capital.

These agreements typically convert to equity at a discount rate of 10-30% below the next funding round's share price, rewarding early investors for their risk. Under Singapore law, they're structured either as convertible notes (debt instruments) or SAFEs (Simple Agreements for Future Equity), with the latter gaining popularity for their simpler terms and paperwork.

Use a Convertible Agreement when your startup needs quick funding but you can't pin down a realistic company valuation yet. This happens often with innovative tech companies in Singapore where the business model is still evolving, or when market conditions make accurate valuations difficult. The agreement helps you secure immediate capital while postponing the tricky valuation discussion.

It's particularly valuable during bridge funding rounds between major investments, or when approaching angel investors who understand early-stage risks. The agreement's flexibility works well for Singapore's fast-moving startup ecosystem, especially when you need to close funding quickly without lengthy negotiations over share prices and equity percentages.

• Convertible Loan Agreement: Basic startup-friendly format treating investment as a loan until conversion, with simple interest rates and conversion triggers
• Convertible Debt Agreement: More structured version with detailed repayment terms and investor protections, often used for larger funding rounds
• Convertible Debenture Agreement: Secured version offering asset-backed protection to investors, common in established companies
• Debt Conversion Agreement: Specifically for converting existing debt to equity, popular in restructuring scenarios
• Loan To Equity Conversion Agreement: Simplified agreement focusing solely on conversion mechanics, ideal for straightforward transactions

• Startup Founders: Lead the fundraising process and negotiate key terms like valuation caps, discount rates, and conversion triggers
• Angel Investors: Provide early-stage capital in exchange for future equity rights, often accepting higher risk for better terms
• Venture Capital Firms: Participate in bridge rounds or offer convertible funding between traditional equity rounds
• Corporate Lawyers: Draft and review agreements to ensure compliance with Singapore's Companies Act and MAS regulations
• Company Directors: Approve and execute agreements as part of their fiduciary duties to both investors and the company
• Financial Advisors: Help structure terms and assess financial implications for both investors and startups

• Company Details: Gather ACRA registration documents, shareholding structure, and company constitution
• Investment Terms: Define investment amount, valuation cap, discount rate, and interest rate (if applicable)
• Conversion Triggers: Specify qualifying financing rounds, maturity date, and any special conversion events
• Investor Information: Collect KYC documents, investment entity details, and proof of funds
• Board Approval: Secure director resolutions authorizing the convertible agreement issuance
• Template Selection: Use our platform's Singapore-compliant templates to ensure all mandatory elements are included
• Documentation: Prepare cap table updates, term sheets, and shareholder notification letters

• Parties and Identification: Full legal names, registration numbers, and registered addresses of company and investors
• Investment Terms: Principal amount, valuation cap, discount rate, and qualified financing thresholds
• Conversion Mechanics: Detailed triggers, calculation methods, and share class specifications
• Maturity Date: Clear timeline for mandatory conversion or repayment obligations
• Interest Terms: Rate calculation, accrual method, and payment schedule if applicable
• Investor Rights: Information rights, pre-emptive rights, and transfer restrictions
• Governing Law: Explicit reference to Singapore law and jurisdiction
• Execution Block: Director signatures, company seal requirements, and witness provisions

Let's compare a Convertible Agreement with a Bond Issuance Agreement, as both involve raising capital but serve distinctly different purposes in Singapore's financial landscape.

• Investment Structure: Convertible Agreements offer future equity ownership, while Bond Issuance Agreements create pure debt with fixed repayment terms
• Flexibility: Convertible Agreements allow for delayed valuation and adaptive terms, whereas bonds require immediate fixed valuations and strict payment schedules
• Target Users: Startups typically use Convertible Agreements for early-stage funding, while established companies use Bond Issuance Agreements for structured debt financing
• Regulatory Requirements: Bond issuances face stricter MAS oversight and disclosure requirements compared to convertible instruments
• Risk Profile: Convertible Agreements carry higher risk but offer greater potential returns through equity conversion, while bonds provide fixed returns with lower risk