đź’ĄWhen to use a CLA? Here are some key takeaways from our event with Nina Portier Reinhart, SICTIC – Swiss ICT Investor Club and Karin Oberlin from MLL Legal:
📄What’s a convertible loan agreement?
A convertible loan agreement is a financial instrument that combines debt instrument with an equity instrument. It’s important to mention that there’s a mechanism by which the debt will convert into equity under certain conditions (e.g. fundraising round).
🤝What needs to be negotiated during a convertible loan agreement?
- What is the loan amount?
- Is there an interest to be repaid or not?
- Is there a cap and a valuation of the company?
- Other typical investor rights (e.g. information rights)
🤗Why do entrepreneurs opt for a convertible loan agreement?
- They can get cash relatively quickly
- It can go fast to negotiate a convertible loan agreement
- It allows the company to have more funds to complete certain milestones
- The investors community, lawyers and tax companies are familiar with this instrument
Thanks to all the startups for your participation!
Maja Schreiner from Sharing Tribe
Jakub Kwapisz from Toradex
Merens Derungs from Arcton
Maren Knief Clerc from mia&noa SA
Alejandro Garcia from AI Retailer Systems