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Ask: Should a startup take $50k worth of uncapped convertible note
What are the pros and cons of taking uncapped convertible note for a startup that has not taken any kind of funding
- _pius 14y agoShould a startup take $50k worth of uncapped convertible note? Yes, assuming the terms are standard.
- reubeneli 14y agoThere really are no cons. As long as it's an accredited investor and your docs are well written (focus on length of time to repay and amount of discount) Just know the moment you take even $1 from outside investors your clock starts ticking and you must deliver. At http://geekli.st http://geekli.st our first investors were on a capped note. If you get offered uncapped... take it.
- johnrgrace 14y agoIf you need the money yes, unless the note has some crazy terms. On the pro side, you've got dry powder and runway from the $50k to keep doing what you're doing. Also you've gotten a vote from at least one investor with real money that you're doing something useful. An uncapped convertable note keeps you out of a lot of messy things like valuation etc. On the con side, you now have an investor and you're going to need to talk with them and listen when they say things. You run the risk of having a crazy idiot to deal with.