Earlier today the Founder Institute's new early-stage investing vehicle, Convertible Equity, was highlighted in the Wall Street Journal in an article by Jessica Vascellaro entitled “New Tack in Early Stage Tech-Investing.”
The piece illustrates the issues "haphazard approaches to seed investing in the past" (namely, Convertible Debt) have created, and how the Founder Institute's "Convertible Equity" approach aims to mitigate those issues. According to Vascellaro, "The unruly business of early-stage technology investing is starting to look more grown-up."
Convertible equity is intended to be an alternative to convertible debt - keeping all of the same benefits of speed and flexibility, but without the risk of debt. Tom Arnold, CEO of PetHub and graduate of the Seattle Founder Institute, is an advocate for the new investment vehicle, and says he recently raised $100,000 of Convertible Equity from friends. He loves that it “doesn’t get carried as debt on [his] books”.
For more information on Convertible Equity, see the documentation here, or read the following articles;
- "Startups Can't Borrow their way to Success" [Founder Institute]
- "Convertible Equity, A Better Alternative To Convertible Debt?" [TechCrunch]
- "Adeo Ressi Introduces 'Convertible Equity', Convertible Debt Without Debt" [Forbes]
- "Start-up savior? Killing convertible debt" [Fortune]
- "‘Convertible equity’: a plan to keep early-stage startups out of debt" [VentureBeat]