We offer a standard 25 000 euro startup financing deal that is structured as a convertible note. If you are raising a round of funding, we can also participate in the round. You can apply for both options with the form linked below.
Convertible notes are a form of financing, where an investor lends money to a company. This loan is then paid back to the investor in shares at a later date. This has several advantages.
The first one is that it is quick and easy to close. You don’t need to put together a full financing round with several investors and you don’t need to issue new shares or change the shareholder agreement. The money can be transferred immediately when the deal is made and the startup is free to include more investors in the same or another convertible note deal later on.
It’s simple. There are very few contractual terms to understand. We have intentionally kept the deal simple, such that it is easy to predict how it affects your finances and cap table, as you build your company.
Thirdly, it allows deferring the valuation of the startup to a later date. In the early days of a startup, it is very hard to tell what the startup is worth, as it consists mostly of a founding team with an idea.
Our deal has the following terms:
Let’s break this down.
20% discount means that we receive a 20% discount to the share price in the startup’s next, qualified financing round when paying back the loan.
A qualified round is a round where more than a 100k euros is raised from investors by issuing new shares in the company.
No valuation cap. This means that there is no limit to what the price of the shares will be when converting the debt into shares. A higher share price is better for the startup. Often, investors will want a valuation cap in convertible note investments, as they don’t want to end up with a very small stake in the company, should the company be a runaway success. We think this is unfair to the company. If you build something valuable and then raise money at a gazillion euro valuation, you end up giving away a very small piece of the company, as part of the deal. In such a case, we will be very happy for all of us.
5% interest. This means that 5% interest accrues annually on the loan. The interest is paid back in shares if conversion from debt to equity takes place.
Should you have any questions regarding the terms of this deal, feel free to reach out to us.
Apply for funding here. Submitting the form is non-binding and doesn’t commit you to anything.