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 […]
Posts Tagged 'convertible debt'
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 […]
Super Angels are high profile entrepreneurs-turned-investors, mostly in Silicon Valley, doing rapid-fire investing in startup entrepreneurs. For many, 10-20 investments per year is the objective. They are now raising small VC funds to finance even more ventures. Are Super Angels a positive influence on the entrepreneurial economy? Let’s take a look at the pros and […]
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? 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 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 […]