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The Convertible Promissory Note is a strategic financing tool widely used in the Australian startup ecosystem, particularly for companies seeking bridge financing between formal funding rounds or initial seed investment. This document is designed to comply with Australian corporate and securities laws while providing flexibility for both investors and companies. It typically bridges the gap between debt and equity financing by allowing companies to defer equity valuation discussions while securing immediate funding. The note includes essential terms such as interest rates, maturity dates, conversion discounts, and valuation caps, along with investor protection provisions. It's particularly useful when companies need quick access to capital without establishing a firm valuation, with the investor having the right to convert the loan into equity shares during a qualifying financing event or at maturity.
