http://altgate.disqus.com/A blog on startups, venture capital and everything in betweenenThu, 04 Mar 2010 10:59:11 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-37986042<p>I'm not into this kind of debt, this causes a lot of trouble and hassles. </p>Jewelry buyers HoustonThu, 04 Mar 2010 10:59:11 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-3144594<p>Reason #6: If the financial world collapses and startups can't raise equity for 6-12 months, then convertible debt really sucks!</p>fnazeeriSat, 18 Oct 2008 10:20:55 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-2255962<p>You raise good points. I wonder if anyone has done a study to test whether convertible debt results in higher returns to founders, on average? </p>fnazeeriWed, 10 Sep 2008 00:05:46 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-2243100<p>I disagree with this post from the company/founder's perspective with respect to pre-Series A seed rounds. Raising $250K on a $XM pre-money valuation is much worse from a dilution perspective than converting $250K of debt + interest + conversion discount/warrant coverage at a $YM pre-money valuation, after the $250K is used to increase the value of the company (X and Y) by greater than the amount of the interest + conversion discount/warrant coverage. if Y &gt; X + value of dilution hit from conversion discount/warrant coverage + interest, then convertible debt is a better deal from a dilution perspective. See <a href="http://www.startupcompanylawyer.com/2007/04/27/should-a-startup-company-raise-its-seed-round-using-a-convertible-note-or-series-a-preferred-stock/" rel="nofollow noopener" target="_blank" title="http://www.startupcompanylawyer.com/2007/04/27/should-a-startup-company-raise-its-seed-round-using-a-convertible-note-or-series-a-preferred-stock/">http://www.startupcompanyla...</a></p><p>On the other hand, I generally believe that convertible debt is a bad deal for investors in pre-series A seed rounds.</p>YokumTue, 09 Sep 2008 04:04:45 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-1926714<p>I wrote on the same subject recently. See an angel's perspective, "Angels: Donâ??t Use Convertible Debt to Fund Startup Ventures" at <a href="http://www.matr.net/article-29148.html" rel="nofollow noopener" target="_blank" title="http://www.matr.net/article-29148.html">http://www.matr.net/article-29148.html</a></p>Bill PayneTue, 24 Jun 2008 20:33:25 -0000http://altgate.com/blog/2008/06/5-reasons-conve.html#comment-1926713<p>Very good overview ... thanks.</p><p>Our problem is that the only offer on the table is likely to be convertible debt ... and I can see us getting killed in our Series A but I don't really have a huge number of choices right now.</p><p>Regards,</p><p>Andrew</p>AndrewFri, 20 Jun 2008 20:28:49 -0000