How it works
Issued as debt with a fixed coupon. Hits a revenue or profit milestone → converts at a defined valuation. Misses → stays debt and amortises. Outperforms → conversion discount widens for the investor.
Best for
High-growth businesses where the founder wants to defer the equity conversation.
high growth
delayed valuation
milestone-based
Related in Blended & structured
Blended Capital Stacks
Layered financing combining grant (first-loss), concessional debt (DFI), and commercial capital (senior tranche) in one deal.
Graduating Grants
Starts as a grant, converts to soft loan, then to commercial terms as the business proves itself. Each graduation triggered by milestones.