Seed-stage start-up financing (Part 3): Crowdfunding

In the two previous publications in this series, we discussed hybrid financing instruments, specifically convertible notes and the Simple Agreement for Future Equity (“SAFE”). In this third and final publication in our series on seed-stage start‑ups, we discuss a financing instrument that has recently been popularized with the emergence of mass communication social media: crowdfunding. Crowdfunding is defined as raising small amounts of money from a large number of people, who are known as crowdfunders, typically via the Internet or a social media portal. Read More

Seed-stage start-up financing (Part 2): Simple Agreement for Future Equity (“SAFE”)

In a previous publication, we discussed the usefulness of convertible debt financing for seed-stage start-ups as well as some of the potential issues involved. The objective of this second publication is to compare convertible notes with an emerging financial instrument developed by the Y Combinator, a renowned start-up incubator based in Silicon Valley, called the Simple Agreement for Future Equity (“SAFE”). Read More

Seed-stage start-up financing (Part 1): convertible note

As entrepreneurs and investors know, seed-stage start-ups are synonymous with high risk for investors. However, that does not mean that all of them avoid investing in a project they believe in, and some, often “angel investors”, do decide to get involved. The convertible note is one of the most common and most popular debt financing instruments for a seed-stage start‑up. Its popularity is a result of its simplicity and low cost, and its speed in comparison to traditional methods of raising capital. It also defers issues relating to valuation of the enterprise to the next round of equity financing. Read More