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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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The Legal Side of Entrepreneurship

YoungUpstarts

Investors typically negotiate from a term sheet, which if not handled properly can create problems that can hurt or kill the startup’s chances when they do their Series A round of funding. They also need to decide whether to structure terms as an equity deal or a convertible security deal.

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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 ).

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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. You can use this as a forcing function to see if some other firm that typically leads would also be interesting in giving you a term sheet. Then start bringing checks in.

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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 For a comprehensive tutorial with sample term sheet, see my prior series here at Gust.) Convertible equity may qualify for preferential tax treatment.

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Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

In this installment, I’ll dig into the “how” by dissecting an example term sheet based on a real deal. For those playing at home, you may find it helpful to download the sample term sheet from my firm’s website and follow along with the commentary. In fact, there is a recent variation on this theme.

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Raising Startup Capital Through Convertible Debt Financing

Business Plan Blog

She recently published an ebook with insights about the impact of JOBS Act & Dodd Frank Act on startup funding, terms like angel, accredited investors, venture capitalists, stock options, Restricted Stock, RSUs. Links to Download Arushi’s eBook. Apple iBook: STARTUP Financing, Equity and Tax.

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