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The Mechanics Behind Investing in Convertible Notes

The Mechanics Behind Investing in Convertible Notes

Submitted by • August 6, 2020 fundwave.com

The basic mechanics of the convertible note explained and how the discount rate and valuation caps have a visible impact on the shareholding pattern. Historically, traditional debt and common equity have been prominent investment instruments used by venture capitalists. Gradually, preferred equity took prominence due to the various safeguards and benefits it offered. Post the dot-com boom, investors came up with a new instrument known as Convertible Notes.

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