Why don't VC's like convertible or safe notes?

Generally, many traditional VCs do not like convertible notes or safe notes. They prefer traditional priced equity rounds. Fred Wilson, avid blogger and Founder / General Partner at Union Square Ventures in New York have written several blog posts outlining his point of view on the matter.

http://avc.com/2010/08/some-thoughts-on-convertible-debt/

http://avc.com/2017/03/convertible-and-safe-notes/

The general thesis is that kicking the valuation conversation down the line and obsfucating the spectre of dilution to founders and investors alike is not a good idea. 

Despite his position, convertible notes and safe notes continue to be very popular. As a founder you will need to do your own research, consult your corporate counsel, and decide what makes sense for you.

Was this article helpful?
0 out of 0 found this helpful


      This website and all posts and content are intended for educational purposes only and for no other purposes. This website does not and is not intended to provide legal, financial or tax related advice. Although we take great care to make sure that all of our information is accurate and useful for it intended educational purposes, if you have a specific issue for which you need actionable advice, please come to the Martin Trust Center in person to speak to one of our Entrepreneurs in Residence (EIR) or consult a licensed attorney or other professional. Despite the backgrounds and qualifications of our staff, mentors, lecturers, authors, EIRs and speakers no attorney-client, advisor, or other confidential/privileged relationship exists or will be formed between you and the Martin Trust Center or the Massachusetts Institute of Technology. Under no circumstances should any content be relied upon in making any decisions that could have any financial or legal impact(s).
Have more questions? Submit a request

Comments

Powered by Zendesk