Convertible note financings and similar transactions, including agreements for future equity called SAFEs, are a popular alternative for startup investment financing due to the difficulty of obtaining a meaningful valuation determination and apparently less onerous documentation, sometimes making it a less costly option.

Despite the popularity of convertible note and SAFE financings, early-stage investors frequently require priced equity rounds. Indeed, many investors prefer a priced equity round because it provides the investor with greater certainty regarding valuation and greater rights, privileges, and protections than convertible notes or SAFEs.

Counsel representing emerging growth companies and their investors must carefully consider each financing mechanism’s pros and cons to evaluate the preferred structure for the particular deal.

The panel will review these and other highly relevant issues:

• Current terms and trends for financing early-stage companies
• How to determine the preferred deal structure: convertible debt or priced equity rounds
• Comparing and contrasting convertible notes vs. equity rounds

CLE credit is available.