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I doubt they would sign a deal that leaves them open like that with handshake deal terms different from the on paper terms. Maybe the debt is only payable on d
by netcan 16y ago
I doubt they would sign a deal that leaves them open like that with handshake deal terms different from the on paper terms. Maybe the debt is only payable on demand.
Can anyone post or point to a sample document?
- paulsingh 16y agoYou'd be surprised. :) I'll post a note term sheet that I raised money on last year once I find it but notice the prepayment clause here: http://startuplawyer.com/convertible-notes/convertible-note-term-sheets http://startuplawyer.com/convertible-notes/convertible-note-... When you're raising on a convertible note, you're essentially taking a loan from the angel. You're promising to "pay them back" at the next financing by converting their money into stock equal to the principal + interest they've accrued on that note. If you really wanted to (and the term sheet doesn't preclude a payback), you could pay them back for only their principal & interest instead of converting them to stock.
- netcan 16y agoI am :) I would be very interested if you could post that doc.
- staunch 16y agoI was curious about this recently, so I looked at a ton of convertible note agreements. Almost all (if not all) included provisions like "cannot be repaid without consent" and/or "elective conversion", which I think both protect the investor against this kind of problem.
- netcan 16y agoWhere did you get the agreements?