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The Legal Side of Entrepreneurship

YoungUpstarts

They also need to decide whether to structure terms as an equity deal or a convertible security deal. “If you’re going to raise $1 million, my advice is to propose a convertible security, because you can get it done quickly and less expensively,” said Schmitz. Convertible Securities.

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A primer on convertible notes, convertible securities, and equity

Hippoland

He/she sets the valuation of your company and terms of the round. The convertible note specifies the mechanics in which the investor receives shares. Those conversion rules, however, are conditional — the price at which a convertible note converts into equity during a priced round is dependent on the valuation of the equity round.

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Convertible Debt: Worst Form Of Seed Financing — Except For All The Others

Gust

I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For Like any promissory note, it bears interest (usually at a nominal rate) and has a maturity date on which the loan must be repaid if it hasn’t been converted to stock (typically around 18 months).

Finance 134
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Houston Startups can Pitch for a $50,000 Venture Investment

Austin Startup

If you win, you will receive a $50,000 investment from Capital Factory in the form of a convertible security ( see the application for more details ). Any software, hardware, or CPG startup located in the greater Houston metropolitan area can apply to participate.

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Seed rounds are dead

Hippoland

I put “equity” in quotes because I include convertible notes and convertible securities in this category.) This is both greater risk and reward – pre-seed funds can gain more ownership in companies by putting more money into the businesses at lower valuations. So we see higher valuations in this space.

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Seed rounds are dead

Hippoland

I put “equity” in quotes because I include convertible notes and convertible securities in this category.) This is both greater risk and reward – pre-seed funds can gain more ownership in companies by putting more money into the businesses at lower valuations. So we see higher valuations in this space.

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Do you need a lead investor in your seed round?

Hippoland

Get a standard convertible note (or convertible security such as 500 Startups’ KISS A), and fill it out. This can help you increase your valuation if you have another firm also give you a term sheet and/or you could potentially get a co-lead to mitigate signaling issues if one firm does not join your next round.