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Convertible notes (iSafe)

Practice — Fund Raising

Convertible notes — the fastest way to raise in India.

When you need to raise money quickly without spending weeks on valuation and heavy paperwork, Convertible Notes are the best option — India's equivalent of the US iSAFE note, designed for speed and simplicity.

Quick answer

Convertible Notes are the fastest fundraising route in India — no valuation report needed upfront, and the whole process typically closes in under a week. Two conditions apply: your company must be DPIIT-recognised, and each investor must put in at least ₹25 Lakhs in a single payout. Only an agreement and Form MGT-14 are required — no PAS-4, PAS-3, or valuation reports at this stage.

Choosing the right instrument

Convertible Notes or CCD — speed vs. flexibility.

Both are debt that eventually turns into equity, but Convertible Notes are built for early-stage speed, while CCDs offer more flexibility for larger or more structured rounds.

Feature Convertible Notes CCD
Speed Fastest — very little paperwork Slower — requires more filings and approvals
Valuation Not needed at the time of raising money Required upfront to set a cap or floor price
DPIIT startup status Mandatory Not required
Ticket size Minimum ₹25 Lakhs from a single investor No minimum limit
Paperwork Only an Agreement and Form MGT-14 Requires PAS-4, PAS-3, and valuation reports
Two conditions, no exceptions

The main requirements.

To use this "express" route for fundraising, both conditions below must be met — there's no partial qualification.

DPIIT recognition

Your company must be registered as a "Startup" with the Department for Promotion of Industry and Internal Trade.

Minimum investment

₹25 Lakhs minimum from a single investor in one payout — this route isn't available for smaller cheque sizes.

Typical timeline

Usually under 1 week — the fastest instrument we offer.

Drafting & approvals 3–5 days Convertible Note Agreement + board resolutions
Filing MGT-14 2 days With the Registrar of Companies
Total time Under 1 week From engagement to funds received
The "no-fuss" execution process

The four steps we handle for you.

Since there is no valuation or allotment form (PAS-3) required at this stage, the process is incredibly lean.

01

The agreement

Our lawyers draft the Convertible Note Agreement, including the discount the investor gets and the cap — the maximum valuation for when the note converts to shares later.

02

Board & shareholder approval

We pass the resolutions to authorise borrowing through Convertible Notes.

03

ROC filing

We file Form MGT-14 with the Registrar of Companies to record the terms of the notes.

04

Money transfer

The investor sends the funds — minimum ₹25 Lakhs — directly to your bank account.

Related practice areas

Not eligible for a Convertible Note? Other routes exist.

01 — No DPIIT status needed

Compulsory Convertible Debentures

For companies without DPIIT recognition, or raising below ₹25 Lakhs per investor — more paperwork, more flexibility.

Practice note
02 — Direct equity

Private Placement — Equity & Preference Shares

For rounds where you want to fix a valuation and issue shares directly, rather than deferring to a later conversion event.

Practice note
Frequently asked questions

Common questions about Convertible Notes.

What happens if we're not DPIIT-recognised?

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Convertible Notes under this route are only available to DPIIT-recognised startups. If you don't have that status, a Compulsory Convertible Debenture (CCD) is usually the closest alternative.

Can we raise less than ₹25 Lakhs per investor?

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No — the ₹25 Lakh minimum per investor, per payout, is a hard requirement for this instrument. Smaller cheque sizes need a different structure, such as a CCD.

What is the "cap" and "discount" in a convertible note?

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The cap sets the maximum valuation at which the note converts to equity, protecting early investors from being diluted at a much higher future valuation. The discount gives the investor a further reduction on the eventual round price, rewarding them for the early risk.

Do we need a valuation report to issue a Convertible Note?

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No — that's the main advantage of this instrument. Valuation only becomes relevant later, when the note actually converts into equity shares at a future funding round.

When does the note actually convert into shares?

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Conversion is typically triggered by your next qualifying funding round, though agreements can also specify a maturity date or other trigger events. We structure this clearly in the agreement upfront.

Ready to raise via a Convertible Note?

Schedule a no-obligation discovery call. We'll confirm your eligibility and draft the agreement within days.

Schedule a consultation Write to rohit@krprassociates.com
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