CFO LAB

Raising money in convertible notes? Here is some advice from Ed Zimmerman:

1) we urge founders to include a provision entitling the holders of a “majority in principal amount of the notes then outstanding” to agree to amend or waive any provision in the agreements.

2) Founders should not only understand the “what if we’re acquired” provision in the convertible notes documents, but should also run a spreadsheet to show the flow of funds in the deal BEFORE agreeing to a letter of intent in an acquisition.

Startup Founders: Avoid These Convertible Note Glitches Unfortunately, one of the biggest mistakes founders make when raising capital for startups is forgetting that convertible notes will actually have to convert. Founders who focus on the simple question of “what will happen when these notes convert?” will likely be spared some pain and suffering when…