Practical Law Glossary Item 6-568-3225 (Approx. 3 pages)
Glossary
Next Equity Financing
Also called a Qualified Financing. A defined term typically used in convertible note or SAFE documents in a startup'sseed financing round to describe a future equity financing that triggers the automatic conversion of the convertible notes or SAFEs into shares of the company's equity securities issued to new investors in that future financing round. The most common event triggering a Next Equity Financing conversion is a startup's Series A financing led by an institutional venture capital (VC) investor, in which outstanding convertible notes and SAFEs convert into shares of Series A convertible preferred stock.