Why do people say that convertible debt financing is cheaper and/or quicker?

質問

Is this true, and if so, why? Can financing a startup with convertible already make sense at the seed stage? Why would a startup not use debt financing/loans then? What is the strategy then if we want to raise money from angels with convertible debt instead of equity?

回答: 1 公開 & 0 非公開

Lawrence lau
IPブローカー

The biggest sticking point in any private investment tends to be valuation and share % ownership. With convertible debt, the valuation is kicked down the road to a priced round. The problem with debt is that it ranks higher than shareholders and so is not true risk-sharing, especially if directors/founders are asked for personal guarantee. There are some that argue that uncapped convertible debt doesn't align the interest of investors and founders (see http://techcrunch.com/2012/09/05/why-convertible-notes-are-sometimes-terrible-for-startups/) . Hence seed financing have standardised on financing for future equity documents. As for the choice for angels, follow the golden rule ... he who has the gold makes the rules.

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