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ARTICLE · 02 APRIL 2024

Startup Finance: Equity Or Convertible Notes?

SimmonsCooper Partners
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In the fast-paced world of Nigerian startups, securing financial support is a critical step toward growth. Many startups in Nigeria face the challenge of finding enough financial support...

NigeriaFinance and Banking
John Ojelabi
John Ojelabi
Chinelo Obiekwe
Chinelo Obiekwe

Introduction to Startup Finance

In the fast-paced world of Nigerian startups, securing financial support is a critical step toward growth. Many startups in Nigeria face the challenge of finding enough financial support to overcome the initial obstacles of survival and growth. With so many opportunities available, it is important for businesses to choose the financing method that best fits their business goals. This article focuses on two financing options: Convertible Notes and Equity Financing, providing founders and investors with the insights needed to navigate their choices effectively.

Convertible Notes Explained

A Convertible Note represents a unique financing instrument in the startup landscape, functioning as a loan that transforms into equity during a subsequent funding round. This approach differs from regular loans, as investors initially forego immediate returns, looking forward to becoming equity holders in the business. Convertible notes are

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