Convertible debt financings are a common type of bridge financing for emerging technology companies. In this AlphaTakes video, Matt Storms discusses term sheets for convertible debt financings for an emerging technology company. He provides a summary of the common key financial and procedural terms that are typically negotiated.
Here are the key takeaways from this video:
(1) The convertible debt term sheet for an emerging technology company should be relatively simple and short
(2) The key financial term in a convertible debt transaction is typically the size of the discount off the next round’s price or the warrant coverage amount
(3) The key procedural terms in a convertible debt transaction typically include the definition of a “Qualified Financing” and the ability to change the transaction documents with less than unanimous approval of the noteholders