Convertible Note: Note Round

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Important facts to consider about the note round include size and closing date

Convertible Note continued:

Size of the Note Round

How much money are you trying to raise via these Convertible notes?

Be sure that the amount is enough to get you some where meaningful. Investors don’t want a “Bridge to Nowhere”. They are usually interested in seeing that you raise some meaningful amount of money to get to your next milestone. If your total size is $300K and you can only get notes up to $95K, it is not worthwhile for the investor.

Investors might also want to limit how much you can raise under this arrangement

Closing Date for the Note Round

You’d like it to be rolling, so you can add more new investors.

Investors want a fixed closing date, but would likely allow another, second, close if it isn’t too late after the first. Investors will expect a minimum amount for the first closing, to ensure that the company is not put in an untenable position if additional closings do not occur.

They typically don’t want someone 6 months from now to get the same deal.

Tip: Transaction costs (legal fees, securities law filing fees, etc.) will be lower the fewer closings there are.

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