Convertible Note Term Sheet example explained line-by-line
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- เผยแพร่เมื่อ 20 ก.ย. 2024
- A line-by-line explanation of a convertible note term sheet to prepare new entrepreneurs to understand and negotiate convertible debt terms for this popular form of startup funding. Download the example term sheet at
www.startupsos.....
Topics covered in this video include:
Convertible Note Financing Amount
Convertible Note Closing
Convertible Note Definitive Agreement
Convertible Note Maturity Date
Convertible Note Interest
Convertible Note Automatic Conversion on Qualified Financing
Convertible Note Automatic Conversion on Maturity
Convertible Note Discount
Convertible Note Valuation Cap
Convertible Note Change in Control
Convertible Note Approval Rights
Convertible Note Board Observer Rights
Convertible Note Participation Rights
Convertible Note Most Favored Terms
Convertible Note Pre-Payment
Convertible Note Amendment and Waiver
Convertible Note Reports (Information Rights)
Convertible Note Confidentiality/No Shop
Convertible Note Legal Expenses
This is a life changer. I have spent countless hours online searching for content like this. Thank you so much
Awesome explanation
I have watched many of your videos in StartupSOS and I am so happy to have found these amazing well explained tutorials about financing. Better than any book I have read so far. Thank you so much for sharing this!
Incredibly well explained, thank you!
Good content
Very good explained! Thanks!
What do you prefer, SAFE or Convertible? If you were raising, what would you pick?
Hi. does the below clause means that all terms and conditions of ALL notes has to be the same?
"At any time following the Closing, the Business may sell Notes representing up to the balance of the authorized principal amount not sold at the Closing (the “Additional Purchasers”). All such sales made at any additional closings (each an “Additional Closing”) shall be made on the terms and conditions set forth in this Agreement and (i) the representations and warranties of the Debtor set forth in Section 3 hereof shall speak as of the Closing and the Debtor shall have no obligation to update any disclosure related thereto, and (ii) the representations and warranties of the Additional Purchasers in Section 4 hereof shall speak as of such Additional Closing. Any Notes sold pursuant to this Section 2.2 shall be deemed to be “Notes,” for all purposes under this Agreement and any Additional Purchasers thereof shall be deemed to be “Purchasers” for all purposes under this Agreement."
How much of my company should I keep for my self after all the funding rounds
In terms of rough numbers, you can expect to sell 20% to 30% of your company in each funding round. Dilution is inevitable. But as long as you keep increasing the value of the company, then your ownership although it reduces as a percent increases in value. In a successful exit, it is not unusual for a founder's ownership in the company to be under 10%. But if the company sells for enough value, that can still be a very happy ending!