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Convertible Debt: An Option to Structure Startup Financing

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
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  Article Summary  
For startups, early funding via convertible debt directly addresses two challenges that often appear with common ways to raise initial capital.

Working with traditional early-stage resources like venture capital firms and angel investors often requires multiple investor entities to complete a round and a period of months before raised funds are available.

Too, it’s not unusual to see a startup’s valuation change before a financing round is completed.

Reviewed in this article is how issuing convertible debt - rather than equity shares - delivers funding more quickly and protects early investors from late-round valuation changes.

With convertible debt, raised funds can be accessed immediately, and a potential decline in valuation means early investors’ stake increases percentage-wise.

Greater Los Angeles entrepreneurs and executives leading startups can benefit from talking with a provider of CFO services: an on-demand CFO brings the expertise needed to structure startup financing so that both the startup and its investors benefit.

  Open as PDF Open the entire article as a downloadable PDF (No form completion is requested.)  
     
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