Hi Paul, There are lots of benefits to doing debt in a seed round. We discuss them in detail here: http://www.venturehacks.com/articles/debt-benefits http://ww

Hi Paul, There are lots of benefits to doing debt in a seed round. We discuss them in detail here: http://www.venturehacks.com/articles/debt-benefits http://www.venturehacks.com/articles/debt-benefits Here's a summary from the article: "Convertible debt is often the best instrument for a seed round. You can close the debt cheaply and quickly and then turn your focus back to your customers. That's good for the company and its investors since speed is a major competitive advantage of a startup. If you or your investors are veering away from convenience, low cost, and speed, you are missing the point of seed stage debt! "The seed stage is the worst possible time for the founders to negotiate an equity financing. The company is nebulous, the founders are inexperienced, and the company is starved for cash and time. The team should be testing hypotheses about their business, not negotiating complicated term sheets." See the article for details: http://www.venturehacks.com/articles/debt-benefits http://www.venturehacks.com/articles/debt-benefits A cap doesn't determine a valuation. It just sets a cap. Setting a valuation implies buying preferred stock, I assume you don't want to buy common stock in the business. That means negotiating investor rights--that is a pain in the ass. (I've never seen this but I suppose you could defer negotiating investor rights and just say that the seed investors will get the same rights as the eventual Series A investors. Anybody want to chime in?) A cap can be closer to the founder's high minimum expectations and avoids a long road show. A cap avoids setting a high valuation and then doing a down round in the Series A. A cap avoids setting a low valuation and then being unable to substantially increase the valuation if you do a Series A soon afterward. If you want more of a reward, we suggested increasing the discount. A 50% discount guarantees you a 2x paper return on your money. A 40% discount guarantees a 1.7x paper return. You can also have the discount increase over time. As always, our hacks are generalized and should be tailored to the specific circumstances. And your deal is mainly determined by your leverage, nothing else: e.g. every deal that closes is a "good deal".