The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand
Both Sides of the Table
SEPTEMBER 5, 2012
Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. The key for entrepreneurs to understand is whether it’s a “full ratchet” or a “weighted average ratchet.” You rarely find full ratchets in early-stage deals any more. I’ll pay the price but I want a full ratchet.” How Convertible Debt with a Cap Behaves Like Full Ratchet.