Convertible Note Conversion to Equity: Angel Investor Outcomes and Risks

This article examines what happens when angel investors' convertible notes convert to equity in tech startups, outlining three common scenarios: best case where VCs honor terms fairly, worst case where terms are ignored or manipulated, and medium case where terms are partially honored. The analysis highlights that convertible notes carry significant risks for angels, particularly when cap tables are gamed or terms are rewritten.