Shortly after the UK government announced its Future Fund, we
received several enquiries about the scheme.
One of the questions frequently asked by Founders related to the
difference between a Convertible Loan Note (the instrument the
government proposes to use to deliver Future Fund support) and an
Advance Subscription Agreement. This brief summary explains the key
features of each instrument.
Convertible loan notes
As 'loan' suggests, this is a type of debt instrument.
Convertible Loan Notes (CLN) are commonplace in the US and are
increasingly popular with investors in the UK. They are often used
when it may be difficult to place a value on the company, due to
anything from the early stage of the company or the wider economic
climate.
