Convertible loan is commonly used by investors this days, and the bellow are the reasoning:
- the business classification does not allow the investor to enter in the company;
- the prospect of the business or company is still in early stage;
- the investor would like to further consider if the company or business attractive/sexy;
- the investor would like the founders or company to be meeting certain performance indicators;
- founders or company would like a chance to repay the investor;
- the investor would like to see if other investor is interested in entering the company;
- less risk for the investor;
- less hassle for the investor;
- and many more..
Please fill in some forms for your inquiries to the convertible note
service draft and consideration here.
What is convertible notes? It is a loan granted by the lender to the borrower where the borrower, where there are options to convert the amount of loan to shares (commonly) but of course you can develop another type of convertible loan –where it can be converted into a product. Are you serious? I do not have to give out my shares but just to pay using my product? – Oh yeah! Its true. You can see this format of a startup launching product like in indiegogo or facebook – where you often see a certain product is sold at certain price and the product will be delivered to you after awhile. Although this type does not have any clear statement of convertible note or even a documentations, but this can be a way out for some of you who’d like to raise funds in creative way.
Now, back to the shares convertible note, this is arrangement normally used by investor in investing in a company due to its hassle free and does not take a long time to establish, in compare to issuance of new shares which might take some time in Indonesia.
The arrangement of convertible note normally will have 2 options :
- by interest rate
- by profit participation
Follow on our next article, for more advise and tips…