Fortunately, convertible notes typically have fewer moving pieces than do equity instruments (which explains, in part, why they’re sometimes favoured by early stage companies and investors – the negotiation and documentation for a convertible note round is likely to be far less time-consuming and costly than for an equity round), but before we proceed any further in dissecting this tool, let’s look at the headline basics of a convertible note: 1) Total Amount Raised by the Note – This amount does have a natural limit. you have an amount ‘outstanding on your cap table’, that will be part of an upcoming round.
If a new round in the future isn’t particularly big, having too much money outstanding can create a problem with your convertible note holders taking up too large a portion of that round.
If the round was supposed to be for 20% of your equity, that means your new investor will only get 10%, an amount that may not excite him that much… To limit the extreme cases of this being done, investors usually create a ‘qualified round’ definition within the Note’s terms for conversion (see bullet #5 below) which reduces the likelihood of this amount being disproportionally larger than a new investors amount as part of a new round.If you think that getting a debt consolidation loan is the best option, think again. With free grants from the government, you can have the funds for paying off your debt without incurring another debt.The best thing about these funds is you don’t need to pay them back. A grant is a kind of gift that requires particular obligations in the grantee’s part at the same time an expectations in the grantor’s part.As a student, your only obligation is to send progress reports of your academic excellence to the government body that awarded you the grant. The grants even don’t need you to give a credit check, security deposits, collateral or co-signers.If you are bankrupt or have a negative credit history you can also apply — as long as you are over 18, a taxpayer and an US citizen.Before consolidating, you should note that some lenders may charge exit fees or early redemption charges if you repay ahead of schedule.