Convertible Notes and Startup Funding
February 12, 2025
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In the previous article, we studied what convertible notes are and how they are used in the context of financing a startup firm. The various terms and conditions which are generally a part of the convertible notes agreement were also explained along with the working of the note. However, before investors and founders make a choice about whether or not they want to use convertible notes, they must fully understand its pros and cons.
This article provides a detailed explanation of the pros and cons associated with convertible notes.
The advantages of convertible notes have been listed below:
Convertible notes are criticized on several grounds. It is said that these notes have several disadvantages, some of which, have been mentioned below.
Convertible notes are generally considered to be a dangerous proposition and form a part of an aggressive financing strategy. Investors, as well as founders, need to carefully consider their pros and cons before deciding on whether to use it or not.
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