Convertible Equity, A Better Alternative To Convertible Debt?

A new funding vehicle for startups is launching, read the details and why it is different than the not-so-friendly convertible debt in current use.  Cash management

Excerpt:  There has been no shortage of controversy and criticism around the convertible note, a popular investing vehicle that’s used by seed stage and angel investors. As a refresher, a convertible note is a loan that automatically converts into equity upon the closing of a Series A round of financing. Sometimes these loans have a valuation cap and/or a discount. Although these types of notes are relatively easy and cheap to form, many have argued that these types of vehicles are not startup-friendly for a variety of reasons, which we’ll explain below. Today, and the Founder Institute is announcing in conjunction with law firm Wilson Sonsini, Convertible Equity, a startup-friendly seed-financing vehicle intended to replace Convertible Debt notes.

Read full article via Convertible Equity, A Better Alternative To Convertible Debt? | TechCrunch.


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