Given the uncertainty Covid-19 imposes on our daily lives, access to funding for startups and scaleups is likely to be even more challenging than it already is in less eventful times and accordingly being able to limit the time and costs spent on transaction is accordingly more important than ever. In our desire to support the Dutch ecosystem for emerging companies and investors, we are happy to announce the launch of the newest version of the Capital Waters Convertible.
Given the uncertainty Covid-19 imposes on our daily lives, access to funding for startups and scaleups is likely to be even more challenging than it already is in less eventful times and accordingly being able to limit the time and costs spent on transaction is accordingly more important than ever.
In our desire to support the Dutch ecosystem for emerging companies and investors, we are happy to announce the launch of the newest version of the Capital Waters Convertible.
As always we have updated our template to cater for market developments and input received from our user base. In addition our highly valued Expert Panel has provided its insights, resulting in a new and improved version that can be downloaded here (as always free of charge). A list of the most notable changes is referenced below.
We hope our 2020 Convertible will benefit fundraising and as always we are keen to hear any comments you may have.
All the best, on behalf of the Capital Waters team and Expert Panel,
Maurits Bos
Changes in 2020 Convertible:
- Our previous convertibles were “pre-money”, because initially startups were raising smaller amounts of money by way of convertibles before raising a priced investment round. Early stage investments have however evolved in the past few years, and startups are raising much larger investment rounds by way of convertibles (or similar investment instruments like SAFE’s or, our EPOS). Like several of our peers (among others Y-Combinator and 500 Startups), we have changed our convertible to being post-money. With post-money we mean that the money invested by way of our convertibles and similar instruments is taken into account when determining the Fully-Diluted Capital that is to be taken into account when determining the conversion. The convertibles will hence not dilute as a result of the funding raised through said convertibles and other instruments, but only as a result of the investment coming in by way of the Qualified Financing round.
- We have simplified the conversion structure by removal of the conversion cap (and also did not include a floor) so the convertibles will always convert against the discount to the next round or fair market value that applies at conversion.
- In a Liquidity-Event, instead of being eligible to payment of a multiple of the loan amount the Loan will instead convert against the Discount prior to the Liquidity Event.
- We added pro rata rights for the investors, entailing that in connection with the investment round that will trigger the conversion, the investors that have provided the convertible loans are able to participate in the new round so as to not dilute their interest as a result of the new investor(s) stepping in.
- Conversion at the maturity date is now done against the fair market value instead of a predetermined fixed valuation.
- We have adapted our convertible to the new licensing format (https://www.capitalwaters.nl/blog/capital-waters-time-for-a-change/).