After 4 years of bootstrapping, we're pivoting and raising money for the first time. A strategic investor is very excited about our business, but not about our convertible note. They want equity for their investment NOW. Other than the obvious (lengthening the time to close, increased legal fees, valuation, control, possible board seat) what else should we be concerned about?
Yes, thats understandable. If a person if giving you money on the spot, you have to rewards them on the spot for their risk. Their money is not convertible they are essentially exchanging their cash for ownership.
Do you know what is a strategic investor? If so, I hope you mean someone who is involved and leveraged in the industry you are staking and will help you directly with not only cash but also connections and on hand work. If this is the case then you will probably have to increase his stake considering this, or have an additional % stock after a certain period on top of what he is getting for his cash.
Answered 8 years ago
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