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Important Terms in Convertible Notes

Important Terms in Convertible Notes and Convertible Equity

When negotiating a convertible note or a convertible equity instrument, there are a few key terms in the negotiation that are significant for the investor and the entrepreneur. In a previous article, we discussed the differences between convertible notes and convertible equity. This article discusses the important terms in convertible notes and convertible equity, including the cap and the discount.  Read more

convertible equity

Is Convertible Equity Better Than Convertible Note and Preferred Stock?

Convertible equity has gained popularity in Silicon Valley after Y Combinator made its Simple Agreement for Future Equity (or “SAFE”) available for free and used it for all of its startups. Since then, 500 Startups followed suit with its affectionately-named KISS document. The intent in creating the convertible equity was to provide a better tool–compared to the convertible note and preferred stock–to handle early-stage investments by angel investors.

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