An angel investor buys convertible notes worth $100,000 in a startup with a 20% discount and a $6 million cap. In the next round, the startup raises equity at $8 per share. What is the effective price per share for the note holder if conversion occurs at the cap?

Sat, 18 Apr 2026 20:36:56 +0000

**Why Angel Investment in Startups Matters—And How Convertible Notes Shape Return** In an era when early-stage funding is fueling much of America’s innovation economy, a growing number of angel investors are turning to convertible notes to back promising startups. With $100,000 invested at a $6 million cap and a 20% discount, an investor secures a unique financial position—one that reacts dynamically to a next funding round. Understanding how this structure works can unlock compelling returns without the front-end complexity of traditional equity deals. This practical insight is gaining traction as startup ecosystems evolve—especially amid rising interest in angel investing among middle- and late-career professionals seeking meaningful participation in growth-stage opportunities. The mechanics behind these notes are gaining attention not just for their simplicity, but for the precise valuation logic they embody. ---