article thumbnail

What is convertible equity (or a convertible security)?

Startup Company Lawyer

Quick answer: convertible equity (or a convertible security) is convertible debt without the repayment feature at maturity or interest. Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds.

article thumbnail

The Legal Side of Entrepreneurship

YoungUpstarts

They also need to decide whether to structure terms as an equity deal or a convertible security deal. “If you’re going to raise $1 million, my advice is to propose a convertible security, because you can get it done quickly and less expensively,” said Schmitz. ” The Cost of Financing.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

A primer on convertible notes, convertible securities, and equity

Hippoland

Lawyers can charge as much as $10k-$30k (in the US) to draft and execute the legal docs for an equity round, and traditionally, founders are responsible for paying for this as well as investors’ legal costs! And the legal costs were just a small drop in the bucket compared to these round sizes. Convertible securities are not loans.

article thumbnail

More Tech Startups are LLCs

Austin Startup

The main drivers, from our viewpoint, are: Many tech entrepreneurs no longer view venture capital as an inevitability in their growth path, and have grown skeptical of the traditional “growth at all costs” mindset found in many startup circles; and An increasing number of VCs are growing comfortable with LLCs.

article thumbnail

$100,000 Autonomous Drones & Mobility Investment Challenge

Austin Startup

If you win, you will receive a $100,000 investment from Capital Factory on a convertible security (see application for more details). 23,000 square feet of collaboration space with the Army Applications Lab, AFWERX, Defense Innovation Unit, the National Security Innovation Network (NSIN?

article thumbnail

Convertible Debt: Worst Form Of Seed Financing — Except For All The Others

Gust

I won’t rehash all of the customary convertible note financing deal terms and points of negotiation here. (For Like any promissory note, it bears interest (usually at a nominal rate) and has a maturity date on which the loan must be repaid if it hasn’t been converted to stock (typically around 18 months).

Finance 134
article thumbnail

Houston Startups can Pitch for a $50,000 Venture Investment

Austin Startup

If you win, you will receive a $50,000 investment from Capital Factory in the form of a convertible security ( see the application for more details ). Any software, hardware, or CPG startup located in the greater Houston metropolitan area can apply to participate.

Houston 80