In addition to regular voting rights, the preferred stockholders also often have additional approval rights over items such as the terms of subsequent rounds of financing and acquisition opportunities. Conversion Discount: When the convertible notes convert to equity in the event of a qualified financing, not only do the note holders get credit for both their original principal plus accrued interest to determine how many shares they receive, they also generally get a discount to the price per share of the new equity. Prior to joining SeedInvest, Aaron co-founded a mobile games development company. In contrast to equity owners, debt holders do not have an ownership interest in the company and do not have voting rights.