I once read a story about a company that used convertible notes to raise pre-seed, then literally never raised again so the VCs never got equity. The founder even screwed over employees on options with this.
Does anybody know the company I'm talking about? Can't find it.
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Might've been SAFEs. But there was definitely a convertible element to the contract, I remember the founder explaining he has told the VCs they can convert and they obviously don't want to (equity worth way more).
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conor with the win theinformation.com/articles/at-bo
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Replying to @growing_daniel
Toptal I think, or one of their competitors
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Convertible notes convert into equity when a company first raises money in a priced round. It's an easy way to sell equity in a startup without having to deal with valuations.
But if you never have that priced round then the investor never gets their equity
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If the company goes public .. then it will be converted to equity right ?
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ya
but if I owned 100% of a company doing 200m in revenue then I'd seriously consider going the Koch Industries route
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sweet remy
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