Convertible notes -- debt instruments
that can be converted into stock at the option of the holder or the
issuer -- are a popular choice among VCs when they participate in early
funding.
On this point, Y-combinator cofounder Paul Grahm tweeted:
“Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.”
But have they really won?
This question was asked on Q&A site Quora yesterday:
Why would an early-stage investor specifically NOT prefer a convertible note structure to straight equity (e.g. a priced/valued preferred stock financing)?
To read the full, original article click on this link: Do VCs Really Prefer Convertable Notes Over Straight Equity?
Author: Alyson Shontell
