When Convertible Notes Make Sense For Consumer Companies

Convertible notes seem to be all the rage for pre-revenue tech startups these days. Convertible notes (aka convertible debt or convertible loans) are a financing mechanism whereby a company raises debt capital from investors at time zero, with the ability for the investor to convert this debt into equity at a later date at a fixed conversion ratio. This funding tool is probably most prominent for early-stage (i.e. pre-revenue) tech companies who often use convertible notes to delay a discussion ...