Both Sides of the Table

SEPTEMBER 18, 2014

Convertible notes were previously used primarily for “inside rounds” in which the existing investors provide you with bridge financing to get to the next round. Is there ever a situation where a convertible note is a good idea? Thanks for asking. Why don’t they set a valuation then?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

cdixon.org

AUGUST 3, 2012

It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As. - Hence, many early-stage consumer startups are switching to transactional models. -

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

Both Sides of the Table

MAY 23, 2010

The industry jargon for convertible debt is a “bridge loan&# or “bridge financing.&# It’s called a bridge loan because it’s meant to provide enough capital to bridge you from your last round of funding until your next round of funding.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Professor VC

APRIL 7, 2011

In cases where it is truly a bridge financing (i.e. From my experience, negotiating debt deals with an experienced investor will result in a number of the same terms and wont save much (if anything) on legal fees. Particularly, now that standard Series Seed docs are commonly used. So when does convertible debt make sense?

San Jose 36

San Jose Technical Review Angel Investor Valuation 36

Venture Chronicles

NOVEMBER 22, 2010

Bridge financing. According to this definition a venture capital firm may only invest in equity securities, which would suggest that a VC firm would be prohibited from offering debt financing… at least under a strict reading.

Venture Capital 49

Venture Capital SEC Redemption Bridge Financing 49

Gust

SEPTEMBER 17, 2014

Convertible notes were previously used primarily for “inside rounds” in which the existing investors provide you with bridge financing to get to the next round. Is there ever a situation where a convertible note is a good idea? Thanks for asking. Why don’t they set a valuation then?

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

www.copelandfirm.com

OCTOBER 21, 2010

Home About Fee Arrangements Location Referrals Testimonials Business Law HUB Certification Mergers & Acquisitions Startup Advice Intellectual Property Copyrights Trademarks Securities Law Debt and Bridge Financing Series A Startup Law Entity Formation Corporation LLC Series LLC RSS Founders Shares: How do you split them up?

Intellectual Property 40

Intellectual Property Founder Vesting Bridge Financing 40

ithacaVC

FEBRUARY 20, 2011

It may explain why Fund Y tries to protect itself, via deal terms, from pay to play provisions that would kick in with respect to future financings.

Bridge Financing 40

Bridge Financing IPO Pay to Play Finance 40

The Startup Lawyer

FEBRUARY 4, 2011

If not, the incubator is just a bridge financing to potentially nowhere for your startup. Regardless if your startup has an angel investor lined up, your startup will need to have a tangible goal in accepting the incubator’s offer that can be realized by completion of the program (or shortly thereafter). Conclusion.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Startup Company Lawyer

JANUARY 11, 2010

Due to the economic results described above, many sophisticated angel investors refuse to do convertible note bridge financings unless the conversion price on the debt is capped. Observation 2 – Angel investors realize convertible debt is a bad deal so they demand price protection provisions (i.e. a price cap).

Angel Investor 39

Angel Investor Valuation Bridge Financing Preferred Stock 39

Up and Running

JUNE 25, 2014

Then going back and understand what it is you need to do to get the path to remove that issue and then see if you can get some type of bridge financing. These companies can get bridge year to where you need to get to until you get the financing that you need. Can you get that, fix that issue and then move back down here.I

Small Business 89

Small Business SBA Finance Bankruptcy 89

The Startup Magazine

OCTOBER 27, 2019

It’s no secret that one of the first things you need to do to get a start-up off the ground is secure financing from investors, a bank, alternative funder, or other business.

Institutional Investors 61

Institutional Investors Startup Security Finance 61

venturehacks.com

OCTOBER 21, 2010

Given that many companies are doing convertible note bridge financings as their seed round, this seems to come up relatively often. Remember, more fully-diluted shares outstanding drives the Series A price per share down, resulting in more dilution to the founders.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68