Convertible Debt vs. Priced Equity Rounds

November 13, 2019 at 1:00pm2:30pm

Convertible note financings--and similar transactions including agreements for future equity, SAFEs, and KISSes--have been a popular alternative for start-up investment financing due to the difficulty of obtaining a meaningful valuation determination, as well as the perceived less onerous documentation making it a less costly option.

Despite the popularity of convertible debt deals, others see an emerging trend toward a return to 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 debt.

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

Listen as our authoritative panel of finance and securities attorneys reviews the pros and cons of convertible debt and priced equity rounds for start-up investment financing. The panel will discuss current terms and trends for financing early-stage companies and will look at the issues from the perspectives of both entrepreneurs and investors.