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

Hippoland

Since this is a hefty topic that we could discuss for days, in this post I’ll aim to cover just the pros and cons of each from a founder’s perspective and will NOT cover: What is a convertible note, equity, or convertible security ? In general, I’m a big fan of convertible notes or convertible securities for seed stage founders.

Equity 48
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A primer on convertible notes, convertible securities, and equity

Hippoland

Most Silicon Valley investors won’t call your note when the maturity date arrives. Outside of the Silicon Valley, there are a lot of investors who don’t care and may call your note on the maturity date. Be careful in choosing your investors — especially if an investor has never invested via a convertible note before.

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More Tech Startups are LLCs

Austin Startup

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. they need to accept that the standardization found in conventional Silicon Valley-style fundraising is simply not a possibility.

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Raising Startup Capital Through Convertible Debt Financing

Business Plan Blog

Some well-known Silicon Valley angel groups are Band of Angels, Sandhill Angels, TIE angels and others. It gives in depth examples & templates explaining documents like Term Sheet, Cap Table, Convertible Securities plus the importance of 83(b) filing. Links to Download Arushi’s eBook.

Finance 93
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Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

This may seem like a no-brainer now that you understand the basic structure of a convertible debt financing. At least one well-known Silicon Valley venture accelerator is using a document referred to as a “ convertible security ” rather than “convertible promissory note.”

Finance 79
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Pre-seed is the new seed

Hippoland

So, I thought it might make sense to take a step back and talk about all the stages of early stage fundraising here in the Silicon Valley. In early stage investing, at least in Silicon Valley, there are basically 4 stages: pre-seed, seed, post-seed (or pre-A), and series A.