Convertible Note & Cap Table Math Guide for Wisconsin

What this calculator does

Run this scenario in DocketMath using the Convertible Note Cap Table calculator.

DocketMath’s Convertible Note & Cap Table Math Guide for Wisconsin (calculator name: convertible-note-cap-table) helps you model how a convertible promissory note converts into equity and what that does to a post-conversion cap table.

In practice, it takes the core economic terms you type in—like principal, discount, valuation cap, and conversion price mechanics—and produces outputs such as:

• Whether the note converts at the cap price or the discounted price
• The conversion price used (and why, based on the inputs)
• Shares issued upon conversion (or held back, if your scenario includes exclusions)
• Founder/investor ownership percentages before vs. after conversion
• A post-money cap table that updates investor ownership in a way you can audit

Because many founders and operators treat “cap table math” as a black box, the calculator is designed for transparency: when you change a single input (for example, the valuation cap), the outputs should shift in an understandable way (conversion price → shares issued → ownership percentages).

When to use it

Use DocketMath when your document stack includes a convertible note and you need to translate negotiated terms into a concrete ownership outcome. Typical moments include:

• Funding discussions: comparing how a 20% discount vs. a $6M cap changes dilution.
• Post-raise cap table cleanup: reconciling a spreadsheet with what the note actually implies.
• Modeling multiple notes: stacking conversions from several instruments into one cap table.
• Preparing for closing documents: ensuring the share counts align with subscription/issuance numbers.
• Scenario planning: projecting outcomes under different equity financing valuations (e.g., $5M vs. $10M pre-money).

If you’re tracking timelines or deadlines around obligations tied to the note or underlying agreement, Wisconsin’s general statute of limitations for certain claims can also matter in planning record retention and response strategies. For example:

• Wisconsin’s criminal statute referenced here provides a 6-year limitations period under Wis. Stat. § 939.74(1) (exception language exists).
  Source: https://codes.findlaw.com/wi/crimes-ch-938-to-951/wi-st-939-74/ (as reflected in the provided jurisdiction data)

Step-by-step example

Below is a numeric example you can follow to see how conversion math flows through a typical “cap + discount” convertible note structure. The exact field names vary by implementation, but the logic is the same: determine the applicable conversion price, then calculate shares, then update the cap table.

Scenario inputs

Assume you have:

• Pre-money valuation in next equity round (priced round): $8,000,000
• Note principal: $1,000,000
• Valuation cap: $6,000,000
• Discount: 20%
• Conversion upon equity financing (i.e., the note converts based on the equity round price mechanics)

Also assume your cap table before conversion is:

Step 1: Determine the share price from the priced round

In many convertible note models, the priced round implies a per-share price:

• **Per-share price = Pre-money valuation / Fully diluted shares (excluding the new note’s conversion, depending on your model assumptions)

For simplicity, assume the fully diluted share count relevant for the priced round is the current total on a straight basis:

• Pre-money per-share price = $8,000,000 / 5,000,000 = $1.60/share

Step 2: Calculate the discounted conversion price

A 20% discount typically means you convert at 80% of the round price:

• Discounted price = $1.60 × (1 − 0.20) = $1.28/share

Step 3: Calculate the cap-implied conversion price

A valuation cap usually sets a maximum effective valuation for the note conversion. Converted at a “cap valuation,” the implied per-share price is:

• Cap-implied price = $6,000,000 / 5,000,000 = $1.20/share

Step 4: Pick the lower (more favorable) conversion price

Most “cap + discount” logic converts at whichever results in the lower conversion price (higher shares). In this example:

• Discounted price: $1.28
• Cap-implied price: $1.20
  ✅ Conversion price used = $1.20/share

Step 5: Compute shares issued on conversion

• Shares issued = Note principal / conversion price
• Shares issued = $1,000,000 / $1.20 = 833,333.33 shares

If the calculator rounds shares, it will either:

• Round to whole shares, potentially adjusting final economics slightly, or
• Allow fractional shares if your model supports it.

Assume the calculator rounds down to 833,333 shares.

Step 6: Update the cap table

New total shares:

• Pre shares: 5,000,000
• Added shares: 833,333
• Post shares = 5,833,333

New ownership:

What changes if you change one input?

Try this sensitivity mentally:

• If you raise the valuation cap (e.g., from $6M to $10M), the cap-implied price increases, making it less likely the cap drives the outcome.
• If you increase the discount (e.g., from 20% to 30%), the discounted price decreases and the note may convert at the discount rather than the cap (or still at the cap, depending on which is lower).
• If the next round valuation rises, discount-based conversion becomes more favorable; cap-based conversion may become less or more favorable depending on how the per-share basis is computed in your model.

DocketMath is built to make those changes visible in the outputs.

Common scenarios

Convertible note math gets tricky when the situation deviates from the “single note → single priced round” story. Here are frequent scenarios and the practical modeling questions to answer.

1) Discount-only notes (no valuation cap)

If your note has only a discount and no valuation cap:

• Conversion price typically = round price × (1 − discount)
• Shares issued = principal / conversion price
• Cap table dilution depends heavily on the next round’s per-share price

Impact pattern: the higher the next round valuation, the more the discount matters (because the discount scales off the round price).

2) Cap-only notes (no discount)

If your note has only a valuation cap:

• The cap-implied conversion price is what matters most.
• You often see “effective valuation” capped—so if the priced round is above the cap, the cap controls.

Impact pattern: once the round exceeds the cap, the note’s conversion economics stop tracking the rising valuation and instead track the cap.

3) Multiple convertible notes converting together

If several notes convert at the same financing:

• Each note may use a different effective conversion price (because their caps/discounts differ).
• The cap table update must be cumulative:

  • Add shares from note #1
  • Then add shares from note #2
  • Recalculate totals (or use a consistent fully diluted denominator, depending on the calculator’s approach)

Practical checklist:

• Confirm rounding behavior for each note (whole shares vs fractional).
• Make sure the calculator’s “conversion event” assumptions match the note terms.

4) Staged conversion / multiple triggers

Some notes convert only under certain triggers (e.g., equity financing above a threshold, or a maturity conversion). When triggers vary:

• Conversion may not occur at all (if thresholds aren’t met)
• Or conversion may occur at different times with different pricing bases

Modeling question for your inputs: does your calculator assume the conversion happens at the next priced round using that round’s per-share price mechanics?

5) Rounding, fractions, and share count conventions

Mathematically, shares issued can be fractional. Real cap tables often require whole shares or specific rounding rules.

Common approaches:

• Round down (conservative dilution)
• Round to nearest
• Allow fractional shares (sometimes used in cap table systems that support it)

DocketMath will compute using a defined rounding strategy for the calculator outputs; you should align your final cap table reporting to the same strategy.

Tips for accuracy

To get reliable results in DocketMath, treat input quality like underwriting: small changes can move the conversion price, which multiplies into shares and then cascades into ownership percentages.

Use a consistent share basis

Conversion per-share price calculations require a denominator: either current shares, fully diluted shares, or a calculator-specific “pre-money fully diluted” number.

Quick accuracy checklist:

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