What is the Convertible Note Cap Table?

startups  was designed to help the early founders of convertible note companies understand just how easy it would be for them to find a buyer for their notes. You see, during the beginning of the last decade or so, many people were getting out of the paper business and having difficulties paying their bills. Many of these people started small, using just a few thousand dollars to start their business. Some of these people are just starting now, as they are discovering that writing a regular paycheck can be hard to do if you don't have some collateral behind you. Now is the time for the small business owner to take a risk and look into the possibility of borrowing money from a new investor that is willing to purchase your convertible note.

However, one problem is that these founders often do not have the full details on what they need to offer in order to entice potential convertible note investors. It's important for these folks to understand exactly what needs to be offered in order to make a good impression on someone like institutional investors. This is also where the convertible note cap table comes into play. With this cap table, you can easily provide the needed information so that potential convertible note investors are willing to go out there and look at the numbers.

Here's how the convertible note cap table works: you, the small business founder, will establish a set of numbers for the cash outlay necessary for your business to work. Of course, there are going to be many other factors in play, including the interest rate that is being offered to you. You will provide all of this information to the small business founders network. Then, once you get some funding in place, you can use this cash to purchase more convertible notes for your business.

The good thing about this option is that you will not have to worry about accumulating an excessive amount of debt in the next round. Once you have purchased enough convertible notes to cover the capital required, you can complete the transaction. After that, you will be able to repay all of the accrued interest as well as any fees that you may owe the company that handled the sale.

How long does it take you to pay off all of the accrued interest? In most cases, you can get rid of the accrued interest in just a few months. That's because most convertible notes have fixed term provisions in which they will automatically convert themselves into fixed term notes. This will allow you to have an easy time getting rid of all of the accrued interest as well as fees over the next few months.

There is a lot of flexibility when you are working with convertible notes, too. For example, you can decide whether or not to convert the notes into cash payments. Since convertible notes can be sold for less than their actual value, this is something that can help you generate some nice profits in a hurry. Of course, if you choose not to sell the convertible notes and instead simply end up holding on to them, you can continue to earn dividends that are tax-free as well. After all, you aren't really making any money if you are paying taxes on the dividends that you are receiving from the business.

What other options are there when it comes to converting convertible notes? Of course, there is always the option of selling the note altogether and receiving whatever payment you receive minus whatever interests and fees that the company is charging you. However, this process is very difficult and risky. Instead of being able to cash in on the benefits of convertible notes, many companies elect to instead hold onto these notes instead.

The convertible note cap table is designed to help you out of a sticky situation.  startups  works by providing you with a way of working with convertible notes that will not put your business in jeopardy. It also works to provide you with a way of making sure that you are keeping yourself out of a situation where you might have to go into bankruptcy and liquidate your assets in order to pay off a debt that you have that is owed to a third party. Of course, you want to make sure that you do not do anything that might put your company's financial health at risk. If that is the case, the convertible note cap table may be exactly what you need.