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What is convertible equity (or a convertible security)?

Startup Company Lawyer

Quick answer: convertible equity (or a convertible security) is convertible debt without the repayment feature at maturity or interest. Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds.

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Raising Startup Capital Through Convertible Debt Financing

Business Plan Blog

Bridge notes/loans are an example of convertible debt. Convertible debt provides startups with a relatively easy way to procure financing. Various terms such as price cap, discount, conversion to equity, etc., Pros and Cons of Convertible Debt. Example: An angel investor contributes $300,000 convertible note to a startup.

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