Pre-seed and Seed Stage Convertible Note and Note Purchase Agreement Transactions

Summary

This practice note will explore early-stage convertible debt financing transactions for start-up companies and provide guidance on drafting and negotiating a note purchase agreement and the accompanying (and sometimes standalone) form of convertible note generally in use today. Today's early-stage start-ups raise capital from outside investors (i.e., those investors who invest in a start-up after the initial investments made by the company's founder(s) and the founders' family and friends) in pre-seed and seed stage rounds primarily through convertible debt or equity financing transactions.