convertible debt
Equity-swappable financing
Convertible debt is a loan that can be converted into equity shares rather than repaid in cash.
Startups commonly use it to raise early funding without immediately setting a company valuation: The seed round was structured as convertible debt.
The conversion typically happens when a future financing round establishes a price per share, often with a discount rewarding early investors for their risk.
- mezzanineIntermediate story between floors
- bridge loanTemporary financing between transactions
- notesBrief written records
- bondsTies that unite
- equityImpartial treatment or ownership value
startup · early stage · venture · financing · angel investor · maturity · maturity date · interest · interest rate · principal · warrants · cap · discount rate · valuation · seed · funding · instrument · subordinated
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