Sublime

convertible debt is that it allows both the entrepreneur and the seed investor to punt on the question of valuation at this early stage of company development.

advances to create an Escrow Reserve account, which acts as a ‘rainy day’ fund. Here’s how it works. “I’ll give you a 80% advance, and temporarily put 5 of the 80 into your Escrow Reserve. We’ll establish an Escrow cap of 10% of your credit limit, and build up the reserve to that cap. For example, let’s say you factor a $1,000 invoice. You’ll get

Paying off a debt is sometimes referred to as a debt being “defeased.” Therefore, the exam could refer to the refunding bonds as being issue in order to “defease” the prior issue of outstanding bonds. In other chapter when we mention custodial accounts for minors, we’ll mention that gifts to the account are “irrevocable and indefeasible.” That

If the angel plans from the start to convert their loan to equity, then you do not have to set it up as a traditional loan with a maturity date and interest payments. Instead, you can put together a Simple Agreement for Future Equity (SAFE). This is not that different from a convertible debt – except that it is not a debt! Instead, the angel

I don’t like buying any AR over sixty days, but if it looks like they will eventually pay, I’ll accept the older AR with a contingency that the seller is on the hook for it if the customer doesn’t pay.

This policy—a promise to buy a certain number of early products to accelerate their invention—is called an “advance market commitment,” or AMC. An AMC is particularly effective when the world needs an abundance of a brand-new technology that is currently too expensive.

Another approach is a simple uncapped note with no discount but with a most favored nation (MFN) clause. This is very generous toward you (and not very good for them), but the MFN clause specifies that as you negotiate deals that are better for the investors, they get to opt in to those as well. It basically commits them to investing at whatever