Convertible Debt
Convertible debt is an investment structure frequently issued by startups when raising seed capital from angel investors. With convertible debt, the startup issues the angel investor a promissory note, for the angel’s investment amount, that contains a conversion feature. The conversion feature is the mechanism by which the debt (the promissory note) will convert to equity (new shares for the investor) upon a future event, such as an Automatic Conversion.
About the Author
Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. Click here to learn more about his practice.
