Understanding Convertible Notes in Startup Investment

This chapter discusses the concept of a convertible note in startup investment, explaining the three main elements: discount, interest rate, and cap. It explores the use of convertible debt in startup financing, its evolution and popularity in venture capital, and the dynamics and motivations of convertible debt investors. Additionally, it examines scenarios where a convertible note may be more appropriate than a priced round and the risks and benefits for angel investors.