Convertible Debt – Wrap Up

And there you have it. We’ve completed our series on convertible debt and hope that you enjoyed it. If we ever get around to writing a second edition of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist we’ll be sure to include this as well.

If you go to the resources section of Ask the VC we’ve included standard forms used in a variety of venture deals. As of this posting, we’ll include some standard convertible debt documents subject to the disclaimer that we aren’t you lawyers and make no reps or warranties with respect to these documents, so use at your own risk.

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  • mattox

    when we started, an ecommerce apparel wholesale site, we used convertible debt. It’s a great tool, but few angel investors understand it. Thanks for the series on the typical mechanics of how CD works -M

  • Max

    Very helpful series. Thanks. You mention here that you will include some standard convertible debt documents in your Resources section. However, I can’t seem to find them there. Could you please tell me where I may find those?

  • While I’ve read Venture Deals multiple times and nearly memorized it, this series was helpful as I was negotiating the second CD round with more sophisticated investors.

    While it’s a couple years old Jason, it’s still golden.

  • Follow on question: I’m hearing that CD, with or without cap, is starting to fall out of favor. I understand from individual investor’s point of view, but is there any reason Angel funding at large may be moving this way?

    • It ebbs and flows. It’s so easy to do a priced round at this point that it’s a toss up.

      • Priced rounds can be challenging if you’re in the anti-Goldilocks stage. When you have a full product, a few customers, some decent traction but aren’t doing $2m/year in revenue yet, it can be difficult to find someone willing to do a reasonable priced round. So far I’ve only found vultures who want half the company, board seat, hire their exec as COO or something, fire half your staff and outsource everything.

        That’s why I’m negotiating a 2nd CD round with sophisticated investors. That, and the timeliness of the funding.