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Atmrix

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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.

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.

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

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

03/07/18

@ Y Combinator

The SAFE is a five-page document that simplifies the investment process compared to traditional financing documents.

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.

GR

Geoff Ralston

10/11/18

@ Y Combinator

Issuing new shares to a shareholder is usually slow and expensive, often requiring legal assistance and granting investors rights that aren't necessary with convertible notes.

DC

Dalton Caldwell

10/23/24

@ Y Combinator

A SAFE, or Simple Agreement for Future Equity, is an alternative to a convertible note that allows startups to quickly raise funds without the complexities of a priced round.