The document discusses convertible notes, which are a type of loan that can optionally convert into equity shares. A convertible note has terms like interest rate, discount, and maturity date. It gives the investor the option to take their money back or convert the note to shares. There may be negotiations over terms like interest, discount, and whether there is a cap on valuation. A cap protects investors if a future valuation is much higher than expected. The document also lists related documents like a term sheet and purchase agreement.

1. WED
24
FOUND.
ATION

2. TODAY
•CONVERTIBLE NOTE
•INVESTMENT TERM SHEET

3. WHO WE ARE
www.setupyourstartup.com
facebook.com/SetUpYourStartUp

4. CONVERTIBLE NOTES

5. • IT IS A LOAN (SORT OF)
• NO CURRENT VALUATION
• SPEED, SIMPLICITY & COST
AT A GLANCE:

6. CONVERTIBLE NOTE
CONVERTIBLE NOTE
“A document signed by
a borrower promising to
repay a loan”
“Converts into shares”

7. INVESTOR’S OPTION
TAKE HIS MONEY
BACK
CONVERT INTO SHARES

8. BASIC TERMS
DISCOUNT
INTEREST
MATURITY DATE
FINANCING AMOUNT
CONVERSION
OPTIONS

9. CONVERSION OPTIONS
SALE OF THE
COMPANYVOLUNTARY
CONVERSION
AUTOMATIC CONVERSION

10. NEGOTIATIONS
YOU THE INVESTOR FINAL
INTEREST 5% 10% 8%
DISCOUNT 10% 30% 20%
CAP NO YES ?
MATURITY
DATE
2 YEARS 1 YEAR ?
SALE 1X 2X 2X

11. CAP – CASE STUDY
WITHOUT CAP WITH CAP
• Investor puts 100K
• Investor estimates valuation at
4M
• 9 months after  Round at
20M valuation
• Investor will have to buy his
shares with 20% discount at
20M valuation
• Investor puts 100K
• Cap at 4M
• Round at 20M
• Investor buys his shares
based on the 4M valuation

12. WITHOUT CAP
FOUNDERS INVESTOR

13. END OF CONVERTIBLE NOTE
•BANKRUPTCY/CLOSING DOWN THE BUSINESS
• COMPANY PAYS BACK AMOUNT WITH INTEREST
• IF NO ASSETS  INVESTOR GETS NOTHING
•FINANCING ROUND: INVESTOR  SHARES
•EXIT: INVESTOR  MONEY

14. WHAT DOCUMENTS YOU ARE
SIGNING
CONVERTIBLE NOTE
TERM SHEET
PURCHASE AGREEMENT

15. THANK YOU

16. Let’s Connect
christina@dimitrioulaw.
Linkedin/in/tsakona
Facebook.com/ctsakona
Twitter.com/ctsakona