equity, investment, investorsSo we’ve raised an initial round through convertible equity & are now looking to raise a new round, however due to the really high legal costs of an equity financing (around $5K-15K) compared to the small amount that we’re raising, we’re thinking of going for another convertible equity round. What would happen in this case? will the initial investment convert? or become a part of the new agreement, with special terms for those initial invests? I’d like to understand what happens here exactly?
It’s probably fine, given the small amount. It’s a little bit as if you had raised one convertible round with multiple investors the first time. This second investor just happens to be coming much later.
To know for sure, you’ll need to read the terms of the first convertible note. It may contain a cap about extra capital raised before the conversion happens, but based on the small amount you are adding, it’s unlikely to trigger, if the clause is there at all.
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