This can be particularly useful for startups that need to raise capital quickly. Unlike equity financing, which can involve complex legal and regulatory processes, convertible notes can be issued relatively quickly and easily. Second, convertible notes are quick and easy to issue. This can make it easier for the startup to raise capital on terms that are favourable to both parties. Unlike traditional debt instruments, which have fixed terms and interest rates, convertible notes allow the startup and the investor to negotiate the terms of the loan, including the interest rate, conversion price, and expiration date. Flexibilityįirst, convertible notes offer flexibility in setting the terms and conditions of the loan. By giving your first investors some money you compensate them for allowing them to take risks on you as an employee. ![]() Why are convertible notes used by startups?Ĭonverted debts have obvious advantages because they can speed up the transaction process for you. You can do it yourself, but that is a bad idea as you can mess up simple things. To facilitate this all it’s generally advisable to use a lawyer.
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