{"id":1233,"date":"2013-01-29T17:35:11","date_gmt":"2013-01-29T22:35:11","guid":{"rendered":"https:\/\/www.spiegelsohmer.com\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/"},"modified":"2016-11-14T16:01:51","modified_gmt":"2016-11-14T21:01:51","slug":"convertible-notes-the-right-tool-for-the-job","status":"publish","type":"post","link":"https:\/\/spiegelryan.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/","title":{"rendered":"Convertible Notes \u2013 The Right Tool For The Job?"},"content":{"rendered":"

Over the last decade, convertible promissory notes (also known as convertible debt) (\u201cNotes\u201d) have become probably the most popular way to invest in seed rounds of start-up and early stage companies.<\/p>\n

Recently, I have read a number of posts criticizing the use of Notes. While it is true that Notes are not right in every circumstance, I believe they are still very useful in the right circumstance, and offer a number of benefits, including the following (nothing earth shattering here, simply a reminder of some good features of Notes):<\/p>\n

    \n
  1. Deferring the valuation of the Company \u2013 Notes do not require a formal valuation, and therefore can defer the time and cost of negotiating the value of the company.<\/li>\n
  2. Control \u2013 Typically, the issuance of Notes does not result in a loss of control for the founders.<\/li>\n
  3. No forced appointment of board members \u2013 While I often see this discussed as a positive for the company but a negative for the investor, in my opinion, this can sometimes also be positive for the investor, as forcing the founders to deal with a professional board member too early can be problematic.<\/li>\n
  4. Debt as opposed to Equity \u2013 Investors are holding a debt instrument, which can potentially give them stronger rights in the event that the company does not perform as expected.<\/li>\n<\/ol>\n

    Conversely, there are two arguments that I often hear in favor of Notes that I do not believe to always be true, namely that they are simpler than an equity purchase in terms of documentation, and cheaper.  If this is the reason you are choosing this vehicle, I suggest giving more thought to other considerations.<\/p>\n

    Adam Saskin<\/a> is a corporate lawyer at Spiegel Sohmer with extensive experience representing both early stage companies and investors.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Over the last decade, convertible promissory notes (also known as convertible debt) (\u201cNotes\u201d) have become probably the most popular way to invest in seed rounds of start-up and early stage companies. Recently, I have read a number of posts criticizing the use of Notes. While it is true that Notes are not right in every […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1233","post","type-post","status-publish","format-standard","hentry","category-business-law"],"acf":[],"yoast_head":"\nConvertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Convertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan\" \/>\n<meta property=\"og:description\" content=\"Over the last decade, convertible promissory notes (also known as convertible debt) (\u201cNotes\u201d) have become probably the most popular way to invest in seed rounds of start-up and early stage companies. Recently, I have read a number of posts criticizing the use of Notes. While it is true that Notes are not right in every […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\" \/>\n<meta property=\"og:site_name\" content=\"Spiegel Ryan\" \/>\n<meta property=\"article:published_time\" content=\"2013-01-29T22:35:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-11-14T21:01:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Spiegel Writer\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Spiegel Writer\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\"},\"author\":{\"name\":\"Spiegel Writer\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/c6d2d3c75452304ab9ac992e9ca0664d\"},\"headline\":\"Convertible Notes \u2013 The Right Tool For The Job?\",\"datePublished\":\"2013-01-29T22:35:11+00:00\",\"dateModified\":\"2016-11-14T21:01:51+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\"},\"wordCount\":298,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/#organization\"},\"articleSection\":[\"Business Law\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\",\"url\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\",\"name\":\"Convertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan\",\"isPartOf\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/#website\"},\"datePublished\":\"2013-01-29T22:35:11+00:00\",\"dateModified\":\"2016-11-14T21:01:51+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Accueil\",\"item\":\"https:\/\/spiegelryan.com\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Convertible Notes \u2013 The Right Tool For The Job?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#website\",\"url\":\"https:\/\/www.spiegelsohmer.com\/\",\"name\":\"Spiegel Ryan\",\"description\":\"Just another WordPress site\",\"publisher\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.spiegelsohmer.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#organization\",\"name\":\"Spiegel Ryan\",\"url\":\"https:\/\/www.spiegelsohmer.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg\",\"contentUrl\":\"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg\",\"width\":1200,\"height\":675,\"caption\":\"Spiegel Ryan\"},\"image\":{\"@id\":\"https:\/\/www.spiegelsohmer.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/c6d2d3c75452304ab9ac992e9ca0664d\",\"name\":\"Spiegel Writer\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/0ee42d879425b46786c89bf604d7cb91f96f0407d4aa63507cf0fe0bf881f6f1?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/0ee42d879425b46786c89bf604d7cb91f96f0407d4aa63507cf0fe0bf881f6f1?s=96&d=mm&r=g\",\"caption\":\"Spiegel Writer\"},\"url\":\"https:\/\/spiegelryan.com\/en\/author\/spiegel_writer\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Convertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/","og_locale":"en_US","og_type":"article","og_title":"Convertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan","og_description":"Over the last decade, convertible promissory notes (also known as convertible debt) (\u201cNotes\u201d) have become probably the most popular way to invest in seed rounds of start-up and early stage companies. Recently, I have read a number of posts criticizing the use of Notes. While it is true that Notes are not right in every […]","og_url":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/","og_site_name":"Spiegel Ryan","article_published_time":"2013-01-29T22:35:11+00:00","article_modified_time":"2016-11-14T21:01:51+00:00","og_image":[{"width":1200,"height":675,"url":"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg","type":"image\/jpeg"}],"author":"Spiegel Writer","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Spiegel Writer","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#article","isPartOf":{"@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/"},"author":{"name":"Spiegel Writer","@id":"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/c6d2d3c75452304ab9ac992e9ca0664d"},"headline":"Convertible Notes \u2013 The Right Tool For The Job?","datePublished":"2013-01-29T22:35:11+00:00","dateModified":"2016-11-14T21:01:51+00:00","mainEntityOfPage":{"@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/"},"wordCount":298,"commentCount":0,"publisher":{"@id":"https:\/\/www.spiegelsohmer.com\/#organization"},"articleSection":["Business Law"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/","url":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/","name":"Convertible Notes \u2013 The Right Tool For The Job? - Spiegel Ryan","isPartOf":{"@id":"https:\/\/www.spiegelsohmer.com\/#website"},"datePublished":"2013-01-29T22:35:11+00:00","dateModified":"2016-11-14T21:01:51+00:00","breadcrumb":{"@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.spiegelsohmer.com\/en\/2013\/01\/29\/convertible-notes-the-right-tool-for-the-job\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Accueil","item":"https:\/\/spiegelryan.com\/en\/"},{"@type":"ListItem","position":2,"name":"Convertible Notes \u2013 The Right Tool For The Job?"}]},{"@type":"WebSite","@id":"https:\/\/www.spiegelsohmer.com\/#website","url":"https:\/\/www.spiegelsohmer.com\/","name":"Spiegel Ryan","description":"Just another WordPress site","publisher":{"@id":"https:\/\/www.spiegelsohmer.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.spiegelsohmer.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.spiegelsohmer.com\/#organization","name":"Spiegel Ryan","url":"https:\/\/www.spiegelsohmer.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.spiegelsohmer.com\/#\/schema\/logo\/image\/","url":"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg","contentUrl":"https:\/\/spiegelryan.com\/content\/uploads\/2025\/09\/Spiegel-Ryan-sitweb.jpg","width":1200,"height":675,"caption":"Spiegel Ryan"},"image":{"@id":"https:\/\/www.spiegelsohmer.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/c6d2d3c75452304ab9ac992e9ca0664d","name":"Spiegel Writer","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.spiegelsohmer.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/0ee42d879425b46786c89bf604d7cb91f96f0407d4aa63507cf0fe0bf881f6f1?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/0ee42d879425b46786c89bf604d7cb91f96f0407d4aa63507cf0fe0bf881f6f1?s=96&d=mm&r=g","caption":"Spiegel Writer"},"url":"https:\/\/spiegelryan.com\/en\/author\/spiegel_writer\/"}]}},"_links":{"self":[{"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/posts\/1233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/comments?post=1233"}],"version-history":[{"count":1,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/posts\/1233\/revisions"}],"predecessor-version":[{"id":1449,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/posts\/1233\/revisions\/1449"}],"wp:attachment":[{"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/media?parent=1233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/categories?post=1233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/spiegelryan.com\/en\/wp-json\/wp\/v2\/tags?post=1233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}