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GR

Geoff Ralston

10/11/18

@ Y Combinator

Convertible notes are a type of debt that we no longer recommend using for fundraising.

Video

YC

Fundraising Fundamentals By Geoff Ralston

@ Y Combinator

Fundraising Fundamentals By Geoff Ralston

10/11/18

Related Takeaways

GR

Geoff Ralston

10/11/18

@ Y Combinator

Convertible notes are great for quick fundraising, but equity is often preferable for larger amounts due to better management and oversight.

GR

Geoff Ralston

10/11/18

@ Y Combinator

Convertible notes complicate the understanding of dilution because you haven't actually sold equity yet, making it hard to determine the real dilution impact until later funding rounds.

DC

Dalton Caldwell

10/23/24

@ Y Combinator

A convertible note is a financial instrument where an investor provides money to a startup, which is treated as a debt-like instrument with specific terms that need careful review.

CL

Carolynn Levy

09/20/19

@ Y Combinator

Convertible securities, which are not stock themselves but convert into stock later, are commonly used in early-stage fundraising events.

GR

Geoff Ralston

10/11/18

@ Y Combinator

When you offer a convertible note, you're selling a promise of equity rather than actual equity in your company.

GR

Geoff Ralston

10/11/18

@ Y Combinator

Convertible notes are fast and simple, typically requiring only 3 to 5 pages of documentation, unlike equity deals which can involve hundreds of pages.

YC

Y Combinator Cast

03/09/18

@ Y Combinator

The rise of convertible notes in venture funding, largely due to Y Combinator's influence, has changed how early-stage companies raise capital.

AB

Andy Bromberg

03/09/18

@ Y Combinator

The rise of convertible notes from 2005 to 2009 allowed startups to raise funds faster as the cost to start a company decreased.

WF

Wade Foster

08/19/17

@ Y Combinator

We view fundraising as a tool rather than an identity; if you don't need it, there's no reason to take on dilution.