Series Seed or Convertible Note? Which one is more founder friendly? Which one do investors prefer?
DECEMBER 18, 2013
Assuming the company is able to make effective use of the seed money to greatly increase the value of the enterprise, all of that value therefore accrues to the founder, rather than the investor. For example, let’s say the “real” value of a startup is $900,000, a seed investor puts in $100,000 on a Convertible Note with a 20% discount, and the company then raises a Series A round of $1 million at a $4 million ‘pre-money’ valuation.