By Kevin Mwanza
A key threshold question for any entrepreneur seeking to raise capital for their startup is whether they should do a priced equity round or use convertible debt instead.
what is the difference between the two?
For starters, a priced round is an offering and sale of newly-created stock in your company at an agreed-upon per-share price. Investors who buy these stocks become part owners of the company.
A convertible note, on the other hand, is a loan from investors that converts into stock at a future date, based on some yet-to-be-determined price, instead of being paid back.
Choosing between a priced round and convertible note
While many startup founders like convertible notes, this option can be challenging when it comes to pricing the stock later, usually within 12-to-24 months when it goes for another funding round.
A high eventual price is usually to the advantage of the entrepreneur while a Click here to read entire article