Are you ready to use a Convertible Note? | AD SME

Are you ready to use a Convertible Note? 

By: Abu Dhabi SME Hub
Fundraising

Are you thinking about raising funds using a convertible note?

If that’s the case, you should have a solid grasp of the financial instrument’s implications, and of the process, so you can negotiate and strike the best possible deal with your potential investors.

So what are the first steps to issue a convertible note? And how and when does one go about converting this investment into equity? 

All in all - are you really ready to get started on convertible notes?

Take this quiz to find out!

Once you've reviewed the course, please take our 2 minute feedback survey so we can understand your needs, and refine our content and value proposition.

You’re thinking of raising equity from external investors. A convertible note will be an appropriate financial instrument if you are…

1 / 6

You’re now ready to issue a convertible note. The first step is to:

2 / 6

Once you’ve issued your convertible note, what are major conversion events (resulting in equity distribution among investors) that you should keep in mind?

3 / 6

Your next qualified financing is:

4 / 6

You raise a Series A round of funding $1M at a valuation of $10M. You own 1M company shares and had previously issued a $500K convertible note (30% discount rate upon conversion, no interest rate or cap value.) How many new shares will you need to issue the founder, the investor and note holder?

5 / 6

Now’s the time for you to convert your convertible note. What method offers the most favourable investment terms to founders? (meaning founders don’t get diluted as much as in the other methods.)

6 / 6

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