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Convertible Note Seed Financings: Founders Beware!

Scott Edward Walker

This part will address certain tricky issues. What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of Preferred Stock? 2) Conversion Right (Investor-Friendly). Part 2, entitled “ Convertible Note Seed Financings: Econ 101 for Founders ,” addressed the economics.

Finance 64
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Venture Capital Term Sheets: Conversion Rights

Scott Edward Walker

Conversion Rights What Are Conversion Rights? As many of you know, VC investors are typically issued shares of preferred stock, not common stock. A conversion right is the right to convert shares of preferred stock into shares of common stock. What Are Optional Conversion Rights?