The conversion formula is not tested against the cap table
Cap, discount, interest and the definition of the next round interact. The agreement should show who receives what under the scenarios the company can realistically face.
Convertible loans · Switzerland
Structure your convertible loan forthis round and the next.
Drafting, review and negotiation of Swiss convertible loan agreements for startups and investors, with the conversion economics and future financing path in view.
We turn the commercial deal into clear terms, workable corporate steps and an agreement that does not create avoidable problems at conversion or diligence.
When this mandate is useful
- Your startup needs bridge or seed funding before a priced equity round.
- You have received a convertible loan or SAFE-style template and need it adapted to Swiss law and practice.
- Founders and investors have agreed the headline deal but not the conversion, maturity or downside mechanics.
- An existing convertible is approaching conversion, maturity or a new financing round.
Resolve the terms that otherwise return at the worst moment
A fast template carries the wrong legal assumptions
Foreign templates can use concepts that do not fit Swiss corporate execution, tax practice or the company’s existing documents.
The expected financing never happens as planned
Maturity, repayment, extension and alternative conversion outcomes need a workable answer before the company is under time or cash pressure.
Several instruments create inconsistent rights
Different caps, discounts, information rights or side letters can complicate the next round and shift leverage during diligence.
What the mandate produces
A convertible loan agreement that reflects the commercial deal, explains the economic outcome and can be executed cleanly by the company and investors.
Structure recommendation
A clear view on whether a convertible loan fits the funding need, timing and expected next-round pathway.
Term and economics review
Analysis of the cap, discount, interest, conversion price and other terms that materially affect founder and investor outcomes.
Swiss agreement
Drafting or revision of the convertible loan agreement for the relevant company, investor group and transaction context.
Negotiation priorities
A focused distinction between terms worth negotiating and drafting points that should not consume disproportionate time or leverage.
Corporate approvals and signing
Preparation of the required resolutions, signature process and supporting steps for a reliable closing record.
Conversion readiness
A documented path for the next financing, maturity or conversion so the instrument can be handled without reconstructing the deal later.
Choose the mandate that matches where the deal stands
The work can start with an open financing question, a negotiated term sheet or an agreement that is already signed. The useful scope depends on the decision that must be made next.
Structure and draft
Useful when
The parties agree that funding is needed but have not fixed the complete instrument or terms.
Watch for
Whether a convertible loan is the right bridge, how much uncertainty can be deferred and which terms must be resolved now.
Review and negotiate
Useful when
A draft or investor template is on the table and the company needs a decision-ready review.
Watch for
Economic terms, investor protections, Swiss-law fit, inconsistencies with existing documents and the practical signing path.
Prepare conversion
Useful when
A financing round, maturity date or other conversion event is approaching.
Watch for
Conversion calculations, instrument priority, approvals, new share issuance and alignment with the round documents and cap table.
The agreement must work beyond the headline cap and discount
A convertible loan is useful because it can defer parts of the financing decision. It still needs precise answers for the events that determine repayment, conversion and ownership.
Conversion event
Define which financing triggers conversion, what qualifies as a financing round and what happens in smaller or differently structured transactions.
Conversion price
Align cap, discount, interest and share-price definitions so the calculation produces an explainable result under realistic scenarios.
Maturity and downside
Address extension, repayment, conversion alternatives and decision rights if the expected next round is delayed or does not occur.
Investor rights and ranking
Set information, transfer, participation, subordination and related rights in proportion to the investment and the company’s existing financing structure.
Illustrative scenario
A quick bridge becomes a difficult seed-round workstream
- Context
- A startup signs several convertible loans on slightly different templates while concentrating on runway and product milestones.
- Consequence
- At the seed round, the parties disagree on conversion calculations, investor rights and how the instruments interact with the new financing.
- Approach
- Reconcile the instruments early, model the conversion outcomes and align the conversion steps with the term sheet and corporate approvals.
The fastest agreement is the one that can still be explained and executed when the next round arrives.
What to bring to the first review
A short, complete document set lets us identify the material decisions quickly and avoid spending time on issues that do not change the outcome.
- 01
Current cap table
Include issued shares, employee participation, promised equity and every outstanding convertible instrument.
- 02
Draft or agreed terms
Share the proposed agreement, term sheet, investor correspondence or a short summary of the commercial deal.
- 03
Financing objective
State the amount, runway or milestone being financed and the expected timing of the next equity round.
- 04
Existing corporate documents
Provide the articles, shareholders’ agreement and prior financing documents that may affect approvals or investor rights.
How the mandate works
Identify the decision
We review the financing need, existing documents, investor expectations and the next event the agreement must handle.
Set and document the terms
We model the material outcomes, recommend priorities and draft or revise the agreement and supporting approvals.
Negotiate and close
We resolve comments, coordinate signatures and leave a clear record for conversion, diligence and the next financing round.
Convertible loan questions founders and investors ask
When does a convertible loan make sense for a Swiss startup?
It often fits when the company needs funding before a defensible valuation or full equity round is ready. The right choice still depends on timing, investor expectations, existing instruments and the credibility of the next financing path.
Can we use a US SAFE or foreign convertible template in Switzerland?
It should not be used without a Swiss review. The economic idea may be retained, but the agreement and execution steps need to fit Swiss corporate law, tax practice and the company’s existing documents.
Which convertible loan terms matter most?
The conversion trigger and price, valuation cap, discount, interest, maturity, repayment or alternative conversion outcomes, ranking and investor rights usually deserve the closest attention.
Should the cap table be modelled before signing?
Yes. The expected ownership effect should be modelled when the loan is agreed and updated before the equity round, especially where several instruments or an option-pool increase are involved.
Can Fehr Legal review an investor’s draft instead of preparing a new agreement?
Yes. The mandate can focus on reviewing and negotiating an existing draft, identifying the terms that materially affect the company and adapting the document where Swiss-law or execution issues arise.
What happens when the convertible loan reaches maturity?
The agreement should define the available outcomes and who decides between them. The practical answer depends on the signed terms, the company’s financial position, investor alignment and whether another financing is imminent.
Understand the financing decisions behind the agreement
Convertible loans in Switzerland
A practical explanation of terms, conversion mechanics, dilution and the decisions to resolve before signing.
Read the guide →Cap-table dilution
See how convertibles, employee participation and a new financing round change ownership on a fully diluted basis.
Read the guide →Note: This page provides general information and is not legal or tax advice. The appropriate financing structure and agreement depend on the company, investor group, existing documents and transaction context. The scenario is illustrative and does not describe a client matter.
Resolve the convertible terms before they become closing issues
Bring the proposed terms, draft agreement or existing convertible. We will identify the decisions that materially affect the financing, conversion and next-round path.
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