In my last company, Advanced Diamond Technologies, there was a time between equity financing rounds when we needed bridge financing. This is very common among young companies. I don’t recall now the circumstances under which we needed to raise money quickly, but it has always been the accepted wisdom that if you need to raise money quickly, use a Convertible Note.
A Convertible Note is a loan to the company made by investors. In our case we tapped existing investors. To avoid the transaction costs of an equity financing, and to avoid the need to negotiate a valuation on the company with the equity investors, a Convertible Note essentially says the following:
To read the original article: Convertible Equity–An Idea Whose Time Has Come | Belief Without Evidence
