Startups early stage pe valuation fix karna avoid karna chahte hain, isliye convertible notes aur SAFE jaise instruments use karte hain. Ye debt–equity hybrid hote hain: abhi paisa loan ke form me aata hai, future me equity me convert ho sakta hai on next funding round.
Legally, yeh instruments companies law, securities law, aur foreign investment rules ke framework me fit hone chahiye. Interest, maturity, conversion triggers, discount or valuation cap – sab clearly define hona chahiye.
Founders ko dhyan rakhna hai ki zyada complex terms future rounds me confusion create kar sakti hain. Investors dekhte hain ki unka downside protection hai, but company over-burden bhi na ho.
Proper documentation, cap table modelling, aur legal vetting ke bina random templates copy karna risky hai. Ek smartly drafted convertible structure fundraising smooth bana sakta hai; badly drafted one later disputes and dilution fights create kar sakta hai.