Valuation Caps on Convertible Notes

Valuation Caps on Convertible Notes

by kirkcoburn
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Our SURGE companies are spending a lot of time thinking about raising money before our demo day, SURGE Day, to drive momentum, hire more people, write more code and anything else that will help them solve the world’s energy problems…

How? The current trend is to use a convertible note. In a nutshell, the convertible note allows the founder to raise money without spending a lot of time stuck in due diligence in order to come up with a valuation. The convertible note seems easy to understand but no one wants to read the legalese. Well, I sure do not.


I found the best explanation (for an entrepreneur) on how convertible notes work especially when a valuation cap in added. The post also includes an excel template that models different scenarios and shows easy to use graphs.

Founders…worth the read

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