Convertible Debt vs. Priced Equity Rounds: Evaluating the Preferred Deal Structure for Early-Stage Financing

Pros and Cons of Different Financing Options for Entrepreneurs and Investors

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, October 23, 2018

Recorded event now available

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Program Materials

This CLE webinar will discuss the pros and cons of convertible debt and priced equity rounds and how to evaluate the optimal deal structure for start-up investment financing rounds. The program will present perspectives from both issuers/owners and investors, as well as look at the current terms and trends for financing early-stage companies.

Description

Convertible note financings, and similar transactions including agreements for future equity, SAFEs and KISSes, have been a popular alternative for start-up investment financing due to the difficulty of obtaining a meaningful valuation determination, as well as the perceived less onerous documentation making it a less costly option.

Despite the popularity of convertible debt deals, others see an emerging trend toward a return to priced equity rounds. Indeed, many investors prefer a priced equity round because it provides the investor with greater certainty regarding valuation and greater rights, privileges and protections than convertible debt.

Counsel representing emerging growth companies and their investors must carefully consider the pros and cons of each financing mechanism to evaluate the preferred structure for the particular deal.

Listen as our authoritative panel of finance and securities attorneys reviews the pros and cons of convertible debt and priced equity rounds for start-up investment financing. The panel will discuss current terms and trends for financing early-stage companies and will look at the issues from the perspectives of both entrepreneurs and investors.

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Outline

  1. Current market terms and trends
  2. Convertible notes: key terms
  3. Priced equity rounds: key terms
  4. Pros and cons of each deal structure

Benefits

The panel will review these and other highly relevant issues:

  • Current terms and trends for financing early-stage companies
  • Determining the preferred deal structure: convertible debt or priced equity rounds
  • Comparing and contrasting convertible notes vs. equity rounds

Faculty

King, Alex
Alex King

Attorney
Archetype Legal

Mr. King focuses his practice on corporate and partnership law with experience in issues of structure and...  |  Read More

Radus, Alexander
Alexander S. Radus

Atty
Fox Rothschild

As a member of the firm’s Corporate Department, Mr. Radus handles a range of corporate matters with an emphasis...  |  Read More

Sigety, Elizabeth
Elizabeth D. Sigety

Partner & Co-Chair, National Emerging Companies & Venture Capital Practice
Fox Rothschild

Ms. Sigety focuses on a wide variety of corporate, venture finance, franchising, licensing and distribution matters....  |  Read More

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