Uncapped Note? No Discount? Making Sense For Entrepreneurs

What is the right cap and discount for your convertible? Should you even have them at all? The latter used to be a very rare situation, now it is a commonly asked question. This article is to help entrepreneurs make sense. 1) Key Principles Let these serve as a reminder: Convertible notes are debt that eventually become equity. The two most powerful levers are cap and discount rate. Priced rounds are equity. Investors generally prefer priced because it gives them more certainty. SAFEs are a type of convertible that has become especially popular because of its simplicity. There are plenty…...