What this calculator does

DocketMath’s Convertible Note & Cap Table Math Guide for Oregon is a practical guide paired with the convertible-note-cap-table calculator. Together, they help you model how a convertible note typically converts into equity—then show the resulting cap table changes after conversion.

Specifically, the calculator is designed to support the arithmetic behind common deal terms, including:

• Conversion discount (e.g., 20% off the next priced round)
• Valuation cap (e.g., cap at $8,000,000 pre-money)
• Interest (accrues over time and may convert)
• Conversion mechanics (how many shares the note becomes)
• Cap table outputs you can sanity-check:

  • New option pool / ownership impacts (if you model them)
  • Updated percentages for founders, investors, and noteholders

Because this guide is Oregon-focused, it also flags where Oregon-specific drafting and execution details often matter in the real world (without turning into legal advice). For the math itself, the underlying model logic is mostly deal-standard; the jurisdiction shows up more in document handling, securities compliance, and how you memorialize terms.

When to use it

Use DocketMath when you need to convert the economic terms of a note into share outcomes and then reflect those outcomes on a cap table—especially at milestones like:

• You’re pricing the next round (the “qualified financing” or similar event that triggers conversion)
• You’re negotiating or re-trading convertible terms (e.g., changing the cap or discount)
• You’re preparing board materials or investor updates showing dilution and implied ownership
• You’re reconciling multiple instruments (note + SAFEs + options + previous preferred)

A few concrete “math moments” that frequently trigger the need for a cap table model:

• The note converts at a price determined by a discount OR the cap, whichever is more favorable to the noteholder (depending on your note’s exact language).
• Interest has accrued for 6, 9, or 12+ months, and you need to confirm whether interest converts in the same way as principal.
• The company is issuing shares at a new pre-money valuation, and the implied conversion price changes automatically.

If you’re operating in Oregon (US-OR), you may also care about how your docs are executed and stored, since Oregon’s business practice often emphasizes clarity in written instruments. Still, the conversion math is driven by your contract terms—so your first step is always mapping the note’s language to the calculator inputs.

Step-by-step example

Below is a simplified but realistic end-to-end example you can mirror in DocketMath convertible-note-cap-table.

Example deal terms

Assume:

• Convertible note principal: $500,000
• Issue date: 2025-01-15
• Conversion event date: 2025-10-15 (9 months later)
• Annual interest rate: 8%
• Valuation cap: $8,000,000 (cap on pre-money)
• Discount: 20% (off the next round’s price per share)
• Qualified priced round: 2025-10-15 priced at:

  • Pre-money valuation: $12,000,000
  • Post-money valuation (for simplicity in this example): $15,000,000
  • Shares outstanding before conversion: 3,000,000 common shares
  • New money in priced round: $3,000,000

To keep the example readable, we’ll treat the new round price as derived from the pre/post valuation and share count. In real modeling, your priced round has a specific share issuance and purchase agreement structure—DocketMath’s calculator typically expects you to provide the share price/price-per-share or enough valuation inputs to compute it.

Step 1: Compute accrued interest

9 months of interest at 8% annually:

• Interest = $500,000 × 0.08 × (9/12)
• Interest = $500,000 × 0.08 × 0.75
• Interest = $30,000

So:

• Total convertible amount = principal + interest = $530,000

Step 2: Compute the effective conversion price using cap vs. discount

Most convertible notes implement one of the common approaches:

• Cap method: conversion price = (pre-money cap ÷ fully diluted shares prior to conversion)
• Discount method: conversion price = (next round price per share) × (1 − discount)

In this example, compute the implied next round price per share

We’ll derive price per share using valuations and share counts.

• Pre-money valuation: $12,000,000
• Pre-money implied common value per share = $12,000,000 ÷ 3,000,000
• Implied next round price per share = $4.00

Discount conversion price:

• Discount price = $4.00 × (1 − 0.20)
• Discount price = $3.20

Cap conversion price (using the cap valuation):

• Cap value per share = $8,000,000 ÷ 3,000,000
• Cap price = $2.6667 (rounded)

Which one is used depends on the note’s “more favorable” rule. A typical structure gives the noteholder the lower conversion price (more shares). Between $3.20 and $2.6667, the lower price is $2.6667, so the cap wins.

Step 3: Convert note amount into shares

Conversion shares = (total convertible amount) ÷ (conversion price)

• Shares = $530,000 ÷ $2.6667
• Shares ≈ 198,750 (rounding depends on your contract and rounding policy)

So the noteholder receives roughly:

• ≈ 198,750 shares

Step 4: Update the cap table totals

Before conversion:

• Existing shares: 3,000,000

After conversion:

• New note shares: 198,750
• New total shares (simplified): 3,198,750

Noteholder ownership (simplified):

• 198,750 ÷ 3,198,750 ≈ 6.22%

Meanwhile, everyone else is diluted:

• Founders/others ownership goes down proportionally, since the conversion increases the denominator.

Step 5: Sanity-check outcomes

When you run this through DocketMath convertible-note-cap-table, check whether it outputs:

• Accrued interest included (if your model includes interest conversion)
• Conversion price selected correctly (cap vs discount)
• Share rounding behavior consistent with your docs (floor/nearest whole share)
• Updated cap table percentages sum to ~100% (allowing for rounding)

Common scenarios

Convertible note math gets tricky because the “typical” structure still has variations. Below are scenarios where DocketMath’s cap table outputs can materially differ.

1) Cap triggers but discount would otherwise win (or vice versa)

The most common fork is whether the noteholder uses:

• lower of (cap-determined price, discount price), or
• cap only, or
• discount only, or
• a more complex “conversion formula” tied to the priced round terms.

What to watch in the calculator inputs:

• Are you providing both cap and discount?
• Does the calculator assume “most favorable to noteholder” (commonly true, but confirm your note terms)?

2) Interest conversion is included vs excluded

Some documents convert principal only; others convert principal + interest.

If interest is included:

• conversion shares increase
• noteholder ownership increases
• everyone else is diluted more

Quick way to detect this error:
If your cap table output changes by roughly $530k vs $500k worth of shares, your model is likely including interest when it should (or vice versa).

3) Multiple notes converting simultaneously

When two or more notes convert in the same financing event:

• Each note gets its own conversion math
• Shares add up
• Denominator includes total note shares + any other issuance

Modeling implication: run all instruments that convert at the same time, rather than one-off. Even if each note’s price is identical, the updated share counts affect the final percentages.

4) Different “effective date” or time-to-convert

Accrued interest often depends on:

• issue date to conversion event date
• or issue date to qualified financing close date
• or a specific conversion notice date

If the conversion event date changes by 30 days, interest changes. That can shift a few thousand shares in mid-six-figure principal deals.

5) Option pool and fully diluted share count assumptions

Convertible notes sometimes use “fully diluted” shares for the denominator in cap-price calculations. Fully diluted can include:

• options outstanding and/or unissued pool
• warrants
• prior conversions

A mismatch between:

• “shares outstanding” you input, and
• “fully diluted shares” your cap-price denominator should reference

…can create a major cap conversion difference.

Practical approach: align the share count basis you input to what the note agreement says. If your note uses “as-converted basis” or “fully diluted,” prefer that basis consistently.

6) Rounding and share issuance conventions

Documents may specify:

• rounding down to whole shares
• issuing fractions vs rounding
• treating decimals differently for cap tables

DocketMath may allow you to control or at least surface rounding behavior. If not, treat tiny percentage differences as model rounding, not a “real” economics issue.

Tips for accuracy

You’ll get the best results by treating cap table modeling as a data-quality exercise, not just a spreadsheet exercise.

Confirm each calculator input maps to your note

Create a

Sources and references

Start with the primary authority for Oregon and confirm the effective date before relying on any output. If the rule has been amended, update the inputs and rerun the calculation.

• Or. Rev. Stat. § 40.455

Related reading

• Inputs you need for convertible note cap table math in United States (Federal) — Input checklist with sourcing guidance
• Worked example: convertible note cap table math in North Carolina — Worked example with real statute citations
• Convertible note cap table math in California — Full how-to guide with jurisdiction-specific rules