Automatic Conversion
Content
Definition
Automatic Conversion is a provision in a convertible note or security that specifies the conditions under which the instrument will automatically convert into equity, typically at a predetermined trigger event like a future financing round.
Usage and Context
Conversion happens when a startup gets more funding, turning loans or investments into ownership without needing further approval.
Frequently asked questions
- Does convertible note automatically convert? Yes, if certain conditions are met, convertible notes can automatically turn into company ownership.
- What are the 4 types of B2B? The four types of B2B are manufacturers selling to distributors, wholesalers selling to retailers, service providers selling to businesses, and software as a service (SaaS) companies selling to enterprises.
- What is B2B marketing called? B2B marketing is commonly referred to as business-to-business marketing, where companies sell products or services directly to other businesses instead of individual consumers.
Benefits
Automatic Conversion helps startups easily switch from borrowing money to owning part of the company when certain conditions are met, making it easier to raise funds.
Conclusion
In summary, Automatic Conversion simplifies the process for startups to switch from debt to ownership when specific conditions are met, easing fundraising efforts.
