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The form of payment is independent of the price you charge. The advantage of using convertible debt is you do not have to decide on valuation. Many people on bo
by ajju 17y ago
The form of payment is independent of the price you charge. The advantage of using convertible debt is you do not have to decide on valuation. Many people on both sides (investors and founders) would find this preferable, precisely because putting a valuation on a very early stage startup in a fair way is nearly impossible.
FWIW, pg suggested using convertible debt in such a scenario although someone else on the same thread links to a counter-opinion. http://news.ycombinator.com/item?id=565493 http://news.ycombinator.com/item?id=565493
- jimboyoungblood 17y agoThe "advantage" of delaying an assignment of valuation exists only for the founders. The only reason investors sometimes prefer a convertible is because it's simpler and therefore lighter on the legal fees. Otherwise it's insanely bad (if uncapped).