Conversion Entrepreneur Preferred Stock Security 
Startup Company Lawyer
AUGUST 31, 2012
Quick answer: convertible equity (or a convertible security) is convertible debt without the repayment feature at maturity or interest. ” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments. Form of Convertible Security Term Sheet.
Gust
SEPTEMBER 29, 2011
The most successful serial entrepreneurs in the world may found three or four, perhaps even eight or ten venture-backed startups over the course of their careers. A term sheet for a convertible note deal may run two or three pages, versus 8-10 pages for a typical Series A Preferred Stock financing.
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Scott Edward Walker
JUNE 9, 2019
For example, if an investor owns 20% of the equity of a startup on a fully-diluted basis following the closing of a Series A round, it will have the right to purchase 20% of the shares of the preferred stock issued in the subsequent Series B round. This is a huge red flag and founders should push back very hard.
Berkonomics
JANUARY 6, 2022
First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.
Gust
OCTOBER 5, 2011
Let’s dive in, taking it from the top: Type of Security : Convertible Promissory Notes, bearing interest at a simple interest rate of 8%. At least one well-known Silicon Valley venture accelerator is using a document referred to as a “ convertible security ” rather than “convertible promissory note.”
Scott Edward Walker
APRIL 9, 2012
ii) why are convertible notes issued instead of shares of common or preferred stock? Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity?
Both Sides of the Table
SEPTEMBER 5, 2012
My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.
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