what is “convertible debt financing” and what does it mean if a startup gets it?
In: 1
It’s pretty straightforward. With convertible debt, a business borrows money with an agreement that the loan can be repaid, all or in part, by the lender converting it into a certain number of shares in the future. It gives the lender some flexibility on how they want to be repaid based on the performance of the company, or any other factors.
If you are thinking of entering into something like that, make sure you get proper agreements in place, and good counsel on your side (I’m assuming you are the founder, not the lender) so that the agreement is fair for all.
It’s pretty straightforward. With convertible debt, a business borrows money with an agreement that the loan can be repaid, all or in part, by the lender converting it into a certain number of shares in the future. It gives the lender some flexibility on how they want to be repaid based on the performance of the company, or any other factors.
If you are thinking of entering into something like that, make sure you get proper agreements in place, and good counsel on your side (I’m assuming you are the founder, not the lender) so that the agreement is fair for all.
Latest Answers