1. Loan can be given from one party or simultaneously together with other parties (known in one round of fund raising as Co-investor);
2. The amount of interest rate (if any) shall be discussed at the amount that is not exceeding any;
3. Maturity Date, is the term of loan advances or granted (e.g 2 years or more);
4. What is trigger to convert?
This is any kind of event that trigger the conversion of loan into shares, there are several samples of this:
a. Initial Public Offering;
b. Next Qualified Financing or closing of the investment round;
c. Certain Key Performance Indicator (e.g : sales revenue, expansions or development progress);
d. Change of control due to merger, acquisition, buy outs and others;
e. Certain government regulation;
f. And many more depending on the negotiation.
5. Alternative methods of payment Other than conversion, will this convertible note allows the loan to be paid in certain timing, methods, manners or form so that the loan will be considered to have been settled.
6. Additional Rights
Within the Convertible notes normally there are some investors or even founders that include other rights to be protected, sample of this are:
a. for Investor Protective measures/Reserved Matters;
b. for founders certain privileges or access given;
Please remember that this is not an exhaustive list, there are many more!!!
7. Conversion Methods
The most important things is that what are the conversion mechanism in case of conversion happen. This can be various, and can be set differently, for e.g: conversion before maturity date, conversion on maturity date, conversion in the event of IPO, conversion in the event of change of control and etc.
8. Additional Discount
Some arranged certain number of discount when calculating the conversion so that the note holder obtain more shares.
28 February 2017|
28 February 2017|
27 February 2017|