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Paul, regarding the statement "I'd rather wait 6-12 months to see what you build, how successful it is, and how well your team executes, and then decide wheth

Paul, regarding the statement "I'd rather wait 6-12 months to see what you build, how successful it is, and how well your team executes, and then decide whether or not to invest." doesn't this assume the angel investor has the option to invest in either the convertible debt seed round or wait and invest in a series A? Who says the entrepreneur is going to be as interested in the angel money comes series A, once the application is launched, momentum is underway and the deal is becomming more interesting to other investors? Is not one of the benefits of an early seed round to an angel, that of access to an exciting team and concept before they take off? And yes, if the team really executes and delivers a huge valuation come series A, the angel gets diluted. But they got in on a big opportunity with a discount, with a greater liklihood of participating again in series A. Maybe this isn't ideal from an investor standpoint, but isn't this still interesting versus waiting on the sidelines and potentially not particpating at all, if you believe in the idea?

paul 19y ago
That puts me in an inferior position to the VCs, and basically implies that I should be happy with whatever I can get. I reject that premise.
- pseudotim 19y ago
  not suggesting you are inferior to vcs.. let me rephrase. If you had the opportunity to invest in a seed round, and they were only willing to accept financing in the form of convertible debt with no cap on valuation, would you reject that opportunity 100% of the time? (Acknowledging a cap is superior from an investor perspective). And if so, are you not concerned about losing opportunity to invest in the series A (assuming you love the idea)? Not because VCs are superior, just based on there potentially being greater competition come Series A. Bird in hand so to speak? In essence, I am asking if this is an absolute position from your perspective or are there not scenarios where a convertible debt investment with no cap could be interesting?
  - paul 19y ago
    If I absolutely loved the opportunity, then perhaps, but I've never encountered any deal like that.

paul 19y ago

That puts me in an inferior position to the VCs, and basically implies that I should be happy with whatever I can get. I reject that premise.

pseudotim 19y ago
not suggesting you are inferior to vcs.. let me rephrase. If you had the opportunity to invest in a seed round, and they were only willing to accept financing in the form of convertible debt with no cap on valuation, would you reject that opportunity 100% of the time? (Acknowledging a cap is superior from an investor perspective). And if so, are you not concerned about losing opportunity to invest in the series A (assuming you love the idea)? Not because VCs are superior, just based on there potentially being greater competition come Series A. Bird in hand so to speak? In essence, I am asking if this is an absolute position from your perspective or are there not scenarios where a convertible debt investment with no cap could be interesting?
- paul 19y ago
  If I absolutely loved the opportunity, then perhaps, but I've never encountered any deal like that.