Convertible Debt – The Discount

As we start our convertible debt series, we’ll focus on the discount. Remember that a convertible debt deal doesn’t purchase equity in your company. Instead, it’s simply a loan that has the ability to convert to equity based on some future financing event (we’ll tackle the conversion mechanics in a later post.)

Until recently, we had never seen a convertible debt deal that didn’t convert at a discount to the next financing round. Given some of the excited market conditions at the seed stage, we’ve heard of convertible deals with no discount, but view this as irregular and not sustainable over the long term.

Full Story: http://www.askthevc.com/wp/archives/2011/09/convertible-debt-%E2%80%93-the-discount.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+askthevc+%28Ask+the+VC%29