Convertible Debt

Convertible Debt is an alternative to equity fundraising. The investor “lends” the startup money at a reasonable interest rate and with a maturity date in the 12-24 month range (usually). The understanding and intent of the investor and company is not for the startup to repay the debt, but rather for that debt to convert into equity at a discount to the next round. A convertible debt round typically includes a Convertible Note and a Convertible Note Purchase Agreement.

Term Sheets 101: Convertible Debt vs. Equity Term Sheets 101 Podcast Questions from Last Night’s TeXchange Q&A

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