Worked example: convertible note cap table math in Singapore

Convertible notes are popular in Singapore seed rounds because they delay hard valuation debates. The trade‑off: your future cap table math gets more complex.

This worked example walks through a full calculation using the DocketMath convertible note cap table calculator for a Singapore company. The focus is on how the inputs drive the numbers, not what deal terms you “should” agree to.

Example inputs

We’ll use a simple but realistic Singapore seed scenario:

• Singapore private limited company (Pte. Ltd.)
• Founders have already incorporated and issued ordinary shares
• A priced equity round (Series Seed) is coming up
• Two existing convertible notes will convert in that round

1. Pre‑money cap table

Assume the company currently has only founders and an ESOP pool:

For simplicity, we’ll treat the ESOP as already granted and fully diluted. There is no unallocated option pool expansion (a big simplification—many Singapore rounds do expand the pool pre‑money).

2. New equity round terms (Singapore context)

Assume:

• Currency: SGD
• New round: Series Seed preferred shares
• Pre‑money valuation: SGD 8,000,000 (on a fully diluted basis, excluding note conversion)
• New cash raised (excluding notes): SGD 2,000,000

This gives:

• Post‑money (before notes): SGD 10,000,000
• Target new investor ownership (before notes):
  2M / 10M = 20% of the company on a fully diluted basis if there were no notes.

3. Convertible notes

You have two notes:

Note 1 – Angel note

• Principal: SGD 400,000
• Accrued interest at round: SGD 40,000
  → Total: SGD 440,000
• Discount to next equity round price: 20% (i.e., pays 80% of the round price)
• Valuation cap: SGD 6,000,000
• Conversion type: whichever is more favourable (investor gets the lower price from discount vs cap)
• Conversion shares: same class as new money (Series Seed preferred)
• No special Singapore‑only quirks assumed (e.g., no unusual redemption features we’d have to model separately).

Note 2 – Seed fund note

• Principal: SGD 600,000
• Accrued interest at round: SGD 60,000
  → Total: SGD 660,000
• Discount: 0% (no discount)
• Valuation cap: SGD 5,000,000
• Conversion type: cap only
• Conversion shares: Series Seed preferred

4. Calculator configuration (DocketMath)

In the DocketMath convertible note cap table calculator, we’d set:

• Jurisdiction: **Singapore (SG)
• Round type: priced equity round
• Valuation basis:

  • Pre‑money valuation excludes note conversion (common in SG and US documents, but always check your term sheet).
• Notes convert:

  • Into the pre‑money (i.e., they dilute founders and ESOP, not the new cash investor’s percentage).
• Price per share basis:

  • Start from pre‑money valuation and fully diluted pre‑round share count.

Example run

We’ll now run through the math step‑by‑step the way DocketMath does internally.

Run the Convertible Note Cap Table calculator using the example inputs above. Review the breakdown for intermediate steps (segments, adjustments, or rate changes) so you can see how each input moves the output. Save the result for reference and compare it to your actual scenario.

Step 1: Compute the round price per share (before notes)

Pre‑money valuation: SGD 8,000,000
Existing fully diluted shares: 1,000,000

Price per share (PPS):

[ \text{PPS} = \frac{8{,}000{,}000}{1{,}000{,}000} = \text{SGD } 8.00 ]

This SGD 8.00 is the undiscounted Series Seed price.

Step 2: Compute each note’s conversion price

We have three possible price concepts:

1. Standard round price: SGD 8.00
2. Discounted price (for Note 1):
   20% discount → pay 80% of price: [ 8.00 \times 0.8 = \text{SGD } 6.40 ]
3. Cap price:
   Cap price is cap valuation ÷ fully diluted pre‑round shares.

Now choose the applicable price:

• Note 1 (best of discount vs cap)

  • Discounted price: 6.40
  • Cap price: 6.00
    Investor gets the lower price → SGD 6.00.

• Note 2 (cap only)

  • No discount
  • Cap price: 5.00
    → Conversion price = SGD 5.00.

Step 3: Compute conversion shares for each note

Formula:

[ \text{Conversion shares} = \frac{\text{Principal + interest}}{\text{Conversion price}} ]

Note 1

• Amount: 440,000
• Conversion price: 6.00

[ \frac{440{,}000}{6.00} \approx 73{,}333.33 ]

Assume rounding down to whole shares (DocketMath lets you choose rounding mode; your legal docs may specify this).

• Note 1 shares: 73,333

Note 2

• Amount: 660,000
• Conversion price: 5.00

[ \frac{660{,}000}{5.00} = 132{,}000 ]

• Note 2 shares: 132,000

Step 4: Pre‑money fully diluted shares after note conversion

Start with:

• Founders: 900,000
• ESOP: 100,000
• Total pre‑notes: 1,000,000

Add notes:

• Note 1: 73,333
• Note 2: 132,000

New fully diluted pre‑money (post‑note) share count:

[ 1{,}000{,}000 + 73{,}333 + 132{,}000 = 1{,}205{,}333 ]

This is the denominator when we think about percentage ownership after notes but before new money.

Step 5: Allocate new investor shares

New investors are paying SGD 2,000,000 at the undiscounted round price of SGD 8.00:

[ \text{New investor shares} = \frac{2{,}000{,}000}{8.00} = 250{,}000 ]

Total post‑money shares:

[ 1{,}205{,}333 + 250{,}000 = 1{,}455{,}333 ]

Step 6: Final cap table after the round

Summary:

Impact:

• Founders + ESOP go from 100% pre‑money to about 68.7% post‑money.
• Convertible note holders together own about 14.1%.
• New cash investors own about 17.2%.

Sensitivity check

This is where DocketMath is especially useful: you can tweak inputs and immediately see how the cap table shifts.

Here are three quick sensitivity runs that often surprise founders.

To test sensitivity, change one high-impact input (like the rate, start date, or cap) and rerun the calculation. Compare the outputs side by side so you can see how small input shifts affect the result.

1. What if the round valuation is higher?

Suppose investors agree to **SGD 12,000,000 pre‑money instead

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• Why we started the DocketMath blog