Checklist raising funding with a convertible note

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  • Raising funding with a convertible note, how to start?

    Do you own a startup? In need of an investment to make your business grow? All ready a big hit in the United States, the convertible note is increasingly popular among startups in the Netherlands to raise start-up capital. With a convertible note you obtain a loan from an investor, while the loan at a later stage (often in a subsequent investment round) can be converted into shares. But why should you not just give the investor stocks? If you want to issue shares for the investment, you will have to agree on a valuation of the company. This often proves difficult for a startup. The discussion that can sprout from a valuation can be moved to a moment when valuation is easier to determinate with a convertible note. This prevents long negotiations, and time is the one thing you desperately need when wanting to grow your business quickly. But how does the process work? What are the steps you should take? With this workflow, we will guide you through all of the required steps.
  • The risks of raising funding with a convertible note

    As an entrepreneur you want to minimize risks while acquiring capital swiftly. It is therefore essential to organize everything before you start meeting investors. When, for instance, the finances of your business are not in order, this might scare off investors. The terms of the loan are also very important during negotiations, for instance, you do not want to agree on a 'cap' that is too low. The cap is the maximum valuation to which the investor may convert their loan upon conversion of the convertible note into shares. The risk of a cap that is too low is that the investor as a result, will get a larger stake in your company than is desirable. A similar risk arises during negotiations with the discount that you agree to on the price per share the investor receives. When this discount is too high, the consequence may be that the investor receives a greater stake in your company than desirable. As you want to get off on good terms with the investor, it is essential to get these matters in writing and prepare the negotiations leading to this point thoroughly, this way you will prevent problems with your investor who will become shareholder of the company later.
  • Steps to take when raising funding with a convertible note

    You do not know where to start when raising funding through a convertible note? This workflow will guide you step by step. It will keep track of your progress for you, so that you will always know what important step to take next towards the investment. Don't know how to perform one of the steps? Don't worry, every step in the workflow is explained as you reach them to ensure that you will know exactly what to do. Furthermore, you can start creating the required documents directly from the workflow.
  • What else do I need?

    When raising funding with a convertible note, you will need a contract. You can start the required steps from the workflow. For instance, you can create your customized contract in minutes. The only thing you will have to do is answer a few questions and our smart software will generate your custom document, which, as a Ligo member, is downloadable for free.
  • Advice on the investment through convertible loans

    Stuck on a legal or tax related question? As Ligo member you can ask our highly specialized lawyers an unlimited amount of questions and you will be able to get free phone consultation. We have specialists in every area of law who will be able to help you in every situation. To give you an idea, here are examples of questions you will be able to ask our experts when raising funding through a convertible note: • At what points should the loans be converted into shares? • Am I obliged to include a cap and a discount in a convertible note? • What are the pros and cons of including a cap in the convertible note? • How high should the interest be on the convertible note in my situation? The legal team of Ligo is here to help you with all questions regarding the workflow or your investment. They are available from 9:00 am until 23:00 pm to help you. You can contact us by phone, e-mail or chat, even in the evening and in weekends. Ask your question in the Ligo chat (in the bottom right corner of your screen) and you will receive an answer from the legal team of Ligo in minutes.

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  • Over 100 contracts in English and Dutch
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  • Unlimited phone consultations with lawyers
  • Sign documents online
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€ 39.95

per month

Yearly

membership

  • Over 100 contracts in English and Dutch
  • Access to all workflows
  • 1 free quote request
  • Unlimited phone consultations with lawyers
  • Sign documents online
  • Safely storage of legal documents
  • Incorporate first BV for only € 249,-

  • Personal advice with Ligo advisor after Legal Checkup

€ 29.95

per month