A primer on convertible notes, convertible securities, and equity


Convertible notes In the 2000s, however, the cost to start a software company decreased dramatically. Raising money on a convertible note is fast — you get your money as soon as an investor signs. There are a lot of convertible note templates on the internet.)

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. Paul Graham sparked some commentary by declaring in a tweet in August 2010 that “Convertible notes have won. Form of Convertible Security.

Should you raise on convertible notes or do an equity round?


A reader named Turner Dean recently asked me whether it’s better to raise seed money on convertible notes or straight-up equity. In general, I’m a big fan of convertible notes or convertible securities for seed stage founders.

The Legal Side of Entrepreneurship


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.

What early stage fundraising in 2018 looks like?


It will be hard to raise a pre-seed round through traditional methods If you are raising money through traditional methods (such as with angels / micro VCs / VCs) via a convertible note or convertible security or equity deal, it will be a lot harder to raise pre-seed money in 2018.

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


Convertible debt? Convertible equity? As of August 2010, Paul Graham famously proclaimed , “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.”

Dear elizy: an investor wants to invest when we have a lead.  what does that mean?


You can certainly feel free to raise your round by setting your own terms on standard convertible notes or convertible securities. Dear elizy : I’m raising my seed round right now. An investor I met with got really excited about joining my round.

Do you need a lead investor in your seed round?


Get a standard convertible note (or convertible security such as 500 Startups’ KISS A), and fill it out. Typically, a lead investor will want to do a priced equity round, so you can convert your convertible notes into this equity round.

Pre-seed is the new seed


4) Lastly, with the definition of “seed” expanding, more fundraising is done on convertible notes or convertible securities. I’m now seeing more rounds get done with convertible notes and securities for much longer.

Raising Startup Capital Through Convertible Debt Financing

Business Plan Blog

Convertible Debt Financing. Among the most common methods of funding used by startups when raising seed capital is “Convertible Debt Financing.” Convertible Debt” is a loan, which is automatically converted to equity at maturity or upon the closing of a round of financing.

The state of Q2 2018 pre-seed/seed-stage fundraising: Part 1 - crypto version


Part 2 will be for pre-seed/seed companies raising traditional equity / debt / convertible security rounds. These companies are publicly announcing their upcoming token sale (without committing to dates) and are using those announcements to generate interest that is converted into private direct sales of tokens. This year has been crazy in the fundraising landscape.

Knowledge Is Power: Convertible Note Financing Terms, Part II


Last week , we gave some attention to the “why” behind convertible note financing for early stage startups. A term sheet keeps things relatively straightforward by summarizing the most significant deal terms in outline form, whereas the deal documents themselves (often referred to as definitive agreements ) — even for a relatively simple convertible debt financing — inevitably contain some densely written legalese.

More Tech Startups are LLCs

Austin Startup

Keeping your options open favors starting out as an LLC, because converting an LLC to a C-Corp is way easier than converting a C-Corp to an LLC. Many angel investors, and also strategic investors, are comfortable investing in LLCs, particularly under a convertible security structure that doesn’t immediately result in equity holdings.

Raising Capital? 3 Tips for Entrepreneurs – Part 2

Scott Edward Walker

I’ve been helping entrepreneurs raise capital as a securities lawyer for 17+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make. Tip #1: Only Sell Securities to “Friends & Family” as a Last Resort. a set value at which the notes convert).