Emerging Enterprise Center Blog - Good Questions - Comments http://www.emergingenterprisecenterblog.com/ Boston Startup Lawyers & Attorneys for Venture Capital & Financing Entrepreneurs en Copyright 2012 Fri, 30 Mar 2012 11:33:04 -0500 Fri, 30 Mar 2012 11:33:04 -0500 http://www.sixapart.com/movabletype/?v=4.32-en http://blogs.law.harvard.edu/tech/rss Marc Step Just like to add that fixed discounts to the next round financing terms can be bad for both the entrepreneur and investor. If the conversion occurs quickly, low discounts are fair to both, but if the conversion takes a full year 10 to 15% there is not enough compensation for investor risk. It is best for both the entrepreneur and investor to have a time based discount, say 6% per month the note is outstanding, with a cap of say 60%.

Also, all notes need a change in control liquidation preference, or conversion at some predefined rate based, on the change in control price.

]]> http://www.emergingenterprisecenterblog.com/startup-issues/good-questions/#18777 http://www.emergingenterprisecenterblog.com/startup-issues/good-questions/#18777 Angel InvestorsStartup Issues Mon, 20 Jul 2009 07:00:00 -0500 Dave Broadwin