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ARTICLE · 23 JUNE 2016

Convertible notes – the perfect fundraising tool for a sunny climate

Marque Lawyers
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A convertible note, comparatively rare in Australia, is a loan that converts to equity at some later date or is paid off.

AustraliaFinance and Banking
Kristy Dixon
Kristy Dixon
Giselle Finnane
Giselle Finnane
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We feel sorry for the convertible note. It doesn't have a sexy ring like crowd-sourced equity funding, and for some reason Australians just don't love them like the Yanks. But notes have a place (especially in start-up financing) and so, before structuring your next round of funding with a VC or angel investor, arm yourself with our convertible note 1-2-3:

  1. What are convertible notes?
  2. Why are the Yanks so hot for them?
  3. What key pricing terms are normally negotiated?

What is a convertible note?

It is a loan that converts to equity at some later date or is paid off. It is a common form of seed stage financing, which is popular and prolific in the United States, but remains comparatively rare in Australia.

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