Archive for the 'Convertible Debt' Category

What would be Reasonable Convertible Debt Deals for Angels

March 6 2014 No Commented

  I have written blogs on why I don’t invest in seed/startup stage deals using convertible debt instruments.  See: Angels: Convertible Debt Is Seldom the Right Security for Startup Investments and When is Convertible Debt the Right Instrument for Angel Investments? I was recently asked to quantify under what terms and conditions I might be […]

Convertible Debt vs. Equity: Which Is Right for Your Startup?

July 17 2011 4 Commented

In a recent post, Bill Clark, CEO of Microventures, did a nice job of summarizing the Convertible Debt versus Equity option for startup investors.  Unfortunately he left out the primary disadvantage to investors, which is why you won’t find most savvy angel investors who are part of angel groups using convertible debt.  Convertible debt can […]

What are Preferred Shares?

March 30 2010 No Commented

What are Preferred Shares? Angel investors are important capital sources for entrepreneurs, providing cash as debt, some of which may be converted later into equity, or more commonly to purchase equity interests in the company.  Seasoned angel investors favor funding seed and startup companies by purchasing preferred shares, rather than simply owning common (ordinary) shares […]

When is Convertible Debt the Right Instrument for Angel Investments?

December 24 2009 No Commented

When is Convertible Debt the Right Instrument for Angel Investments? In my last post, I concluded that convertible debt securities are seldom appropriate for angel investments.  My primary conclusion was that using convertible debt was likely to substantially reduce the ROI of “smash hits,” those 7% of angel investment that provide 75% of our ROI. […]

Angels: Convertible Debt Is Seldom the Right Security for Startup Investments

December 23 2009 No Commented

Angels:  Convertible Debt Is Seldom the Right Security for Startup Investments Just after the Internet bubble burst in 2001, many of us angels were “crammed down” unmercifully by subsequent investors in our portfolio companies.  These new investors were funding our companies at valuation far below the pricing we had agreed to earlier, resulting in substantial […]