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ii) why are convertible notes issued instead of shares of common or preferredstock? and (iii) what are the advantages of issuing convertible notes? In the context of a seed financing, the debt typically automatically converts into shares of preferredstock upon the closing of a Series A round of financing.
What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of PreferredStock? As discussed in part 1 , in the context of a seed financing, a convertible note is a loan that typically automatically converts into shares of preferredstock upon the closing of a Series A round of financing.
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