Comments on: How to Set Conversion Discounts in Convertible Notes http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes Startup Law, Incorporation, Convertible Notes, Preferred Stock, Stock Options, Venture Capital Sun, 22 Jan 2012 19:35:50 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Steve Rosard http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-4057 Steve Rosard Fri, 19 Nov 2010 15:35:00 +0000 http://thestartuplawyer.com/?p=1619#comment-4057 Ryan, I love your blog. It seems though that trading the valuation negotiation for the discount rate negotiation is only worthwhile when a qualified financing is on the horizon or when the angel can help lead the company to qualified financing in the near term. Otherwise, as you mentioned in another post, the angel has a negative incentive re: growing the company's value, even with a ratcheted discount rate. Ryan, I love your blog. It seems though that trading the valuation negotiation for the discount rate negotiation is only worthwhile when a qualified financing is on the horizon or when the angel can help lead the company to qualified financing in the near term. Otherwise, as you mentioned in another post, the angel has a negative incentive re: growing the company’s value, even with a ratcheted discount rate.

]]> By: Steve Rosard http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-4058 Steve Rosard Fri, 19 Nov 2010 15:35:00 +0000 http://thestartuplawyer.com/?p=1619#comment-4058 Ryan, I love your blog. It seems though that trading the valuation negotiation for the discount rate negotiation is only worthwhile when a qualified financing is on the horizon or when the angel can help lead the company to qualified financing in the near term. Otherwise, as you mentioned in another post, the angel has a negative incentive re: growing the company's value, even with a ratcheted discount rate. Ryan, I love your blog. It seems though that trading the valuation negotiation for the discount rate negotiation is only worthwhile when a qualified financing is on the horizon or when the angel can help lead the company to qualified financing in the near term. Otherwise, as you mentioned in another post, the angel has a negative incentive re: growing the company’s value, even with a ratcheted discount rate.

]]> By: Ryan Roberts http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-1476 Ryan Roberts Sun, 04 Apr 2010 13:42:56 +0000 http://thestartuplawyer.com/?p=1619#comment-1476 Different holders can have different discounts, but it's typically due to compensation for risk. That is you might see someone get a 30% discount and a second investor comes in 3 months later at a 25% discount. You'll probably want to have all investors who invest at the same time have the same discount. Different holders can have different discounts, but it's typically due to compensation for risk. That is you might see someone get a 30% discount and a second investor comes in 3 months later at a 25% discount.

You'll probably want to have all investors who invest at the same time have the same discount.

]]> By: Ryan Roberts http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-2763 Ryan Roberts Sun, 04 Apr 2010 13:42:00 +0000 http://thestartuplawyer.com/?p=1619#comment-2763 Different holders can have different discounts, but it's typically due to compensation for risk. That is you might see someone get a 30% discount and a second investor comes in 3 months later at a 25% discount. You'll probably want to have all investors who invest at the same time have the same discount. Different holders can have different discounts, but it's typically due to compensation for risk. That is you might see someone get a 30% discount and a second investor comes in 3 months later at a 25% discount.

You'll probably want to have all investors who invest at the same time have the same discount.

]]> By: Casey http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-1467 Casey Thu, 01 Apr 2010 22:50:33 +0000 http://thestartuplawyer.com/?p=1619#comment-1467 Hey Ryan, how often does it occur that different investor have different discounts? In other words, you get I1 in at a 15%, I2 demands 20%, and because you really want him, you roll with it. Obviously this isn't desirable, but will it cause irreparable damage come Series A time? Hey Ryan, how often does it occur that different investor have different discounts? In other words, you get I1 in at a 15%, I2 demands 20%, and because you really want him, you roll with it.

Obviously this isn't desirable, but will it cause irreparable damage come Series A time?

]]> By: Casey http://startuplawyer.com/convertible-notes/how-to-set-conversion-discounts-in-convertible-notes#comment-2762 Casey Thu, 01 Apr 2010 22:50:00 +0000 http://thestartuplawyer.com/?p=1619#comment-2762 Hey Ryan, how often does it occur that different investor have different discounts? In other words, you get I1 in at a 15%, I2 demands 20%, and because you really want him, you roll with it. Obviously this isn't desirable, but will it cause irreparable damage come Series A time? Hey Ryan, how often does it occur that different investor have different discounts? In other words, you get I1 in at a 15%, I2 demands 20%, and because you really want him, you roll with it.

Obviously this isn't desirable, but will it cause irreparable damage come Series A time?

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