SAFEs, CLNs, and ASAs explained

What it does

A convertible is cash received now in exchange for shares issued later — at the next priced round, typically. Three flavours:

• SAFE — Simple Agreement for Future Equity (Y Combinator). No interest, no maturity. Converts on next priced round.
• CLN — Convertible Loan Note. Has interest + a maturity date. Converts at trigger OR is repaid at maturity.
• ASA — Advance Subscription Agreement. UK SEIS/EIS-friendly variant. Subscriber commits now; shares issue later.

All three share the same conversion mechanic: convert principal (+ accrued interest, for CLNs) to shares at a price that's the lower of:

• The next-round price × (1 − discount_rate), OR
• The price implied by the valuation_cap on outstanding shares

Lower price = more shares for the convertible holder — the whole point of having a cap.

How to issue a convertible

1. Go to Company → Convertibles
2. Click New convertible
3. Pick the type (SAFE / CLN / ASA)
4. Pick the investor from your admitted shareholders (or enter a name; you can link the shareholder later)
5. Enter the principal amount and currency (GBP unless cross-border)
6. Set the issue date
7. Enter the discount rate (e.g. 20%) and/or valuation cap (e.g. £5,000,000)
8. For CLN: also enter the interest rate and maturity date
9. Click Issue

The convertible is now outstanding on the cap table. It accrues (for CLNs) until the trigger.

How to convert at the next priced round

1. Open your Series A round (or whichever round is converting), via Funding Rounds
2. Go to Convertibles and click Convert on the row
3. Pick the target share class (the new class the round is issuing, e.g. Preferred A)
4. Enter the round price per share
5. Optionally link to the funding round for cleaner cap-table grouping
6. Click Preview conversion → to see:
   • The price-with-discount
   • The price-at-cap (using outstanding shares pre-round as the denominator)
   • The effective price (lower of the two)
   • The converted share count
7. Click Convert

Behind the scenes, Blankitt:

• Computes the conversion price (cap vs discount, or your override)
• For CLNs, accrues simple interest from issue to conversion
• Issues the converted shares to the investor via the standard pipeline
• Closes the convertible (status=converted, converted_shares + converted_at recorded)

Repaying a CLN

CLNs sometimes get repaid in cash rather than converted (typically if the company doesn't raise the qualifying round before maturity). Hit Repay on the row, set the repayment date, and the convertible closes with status=repaid.

Tips

• For SAFEs always set both discount and cap. The "automatic conversion" calc picks the better one for the investor — if only one is set, that's what they get.
• For ASAs, watch the SEIS/EIS time limits. Shares must issue within 6 months of the agreement, or SEIS/EIS relief can be lost. Blankitt doesn't auto-check this yet — it's on your accountant.
• The convert action issues shares atomically with the convertible-status update — partial states can't happen.