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Home Business & Finance More cash-crunched companies turn to convertible notes – TechCrunch

More cash-crunched companies turn to convertible notes – TechCrunch

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Convertible notes are not just for early stage startups any more. These promissory notes, which are structured as debt that convert into equity upon a specific event such as a certain date or the closing of a priced investment round, are increasingly being adopted by established companies that have already raised millions of dollars in venture capital. In the past, these financial instruments have been the province of founders that weren’t sure how to value their companies. If they agreed to sell a fixed percentage of their startup when they didn’t have a lot of customer traction, they might be giving up a lot of upside in their company. […] a venture-backed nine-year-old, New York-based company that provides workspace to creatives is in the process of raising $15 million in convertible debt, shows an SEC filing. […] And in some sense, the use of convertible notes by later-stage companies can be viewed as a positive sign.


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