Crack The Right Investment Deal With Your Investor

Online Learning to Master CCDs, CCPS, Convertible Notes & More

After finding the right investor, the next very important decision that a founder must make is regarding the investment deal structure. Is it going to be a pure equity investment or a compulsorily convertible debenture? Which one suits your business the best at this point of time? Just cracking an investment is not sufficient. Cracking the right investment deal structure is what is critical to the future of your business. This particular FundEnable course is designed to help you understand the different types of deal structures and the pros and cons associated with them.

What You Will Learn

The FundEnable Takeaways

Learning Outcomes For The Right Investment Deal

  • Learn the different types of investment deal structures, pros and cons

  • In depth understanding of Compulsorily Convertible Debentures, Compulsorily Convertible Preference Shares, Safe Notes and More

  • Map the right investment deal structure for your business in accordance with the business stage and financing round

Unlock this Course to Understand Investment Deal Structures

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Get 1 Year Access for INR 1000/- only (T&C Apply)

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    ₹5,900.00 / yearThe FundEnable Toolkit

    A collection of business fundraising essential resources. It contains 12 online courses providing a 360º understanding of the fundraising process along with 8 templates that are 100% customizable according to business needs.
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Frequently Asked Questions

  • If I am raising the very first round of funding, which is the best structure of investment?

    During the very first round which happens at an early stage, there is very little operating data and hence valuation discovery becomes challenging. It is advisable to go for a convertible structure such as convertible notes or CCD (Compulsorily Convertible Debenture). However, the choice depends on case to case basis.

  • If the company has taken a loan or if there are unpaid salaries of the staff, can the investor money be used for retiring the debt or payment of unpaid salaries?

    Usually, investors will put a clause that the investment cannot be used for unpaid salaries, retiring debt, payment of past dues, etc. The invested capital has to be primarily used for expansion purposes.

  • In CCD structure, what if there is another round of funding in the company within a year before the debt is converted to equity?

    In case another round of funding happens before the conversion of CCD, a discount % is applied to the new round and the debt is converted to equity.

  • Can 3rd or 4th round of funding happen through a convertible note or CCD structure?

    By the 3rd or the 4th round, the company has enough operating data and financial numbers basis which valuation can be discovered and hence typically 3rd, 4th rounds are priced rounds where valuation is decided and % equity is given to the investors.

  • Can CCD also have an interest rate?

    The objective of hybrid or debt-like structure is not to make money through interest. The only reason why we have entered into a convertible structure because valuation discovery was challenging due to the early stage of the company. Hence generally there is no interest rate to CCD for funding in early-stage companies. However, CCDs technically can have an interest rate.

  • In a convertible note structure, how do we arrive at a discount% to the next round of funding?

    The discount % to the next round of funding is purely a negotiated number and can range from 20% to 40%.

  • If no upfront shares are given to an investor in a convertible structure such as CCD or Convertible Notes, how does the investor have shareholder's rights without owning shares?

    Investors investing through CCDs or Convertible Notes subscribe to 5 to 10 equity shares just to get shareholder's rights. Also, most of the rights in the CCD or C-Note Agreement signed between the investor and the company are "as on converted basis". This means these rights are given to the investor assuming that debt is converted into equity.

  • Can a personal guarantee be sought from the promoters against the debt?

    Generally, no investor does that.

  • Is a year's time period fixed for the conversion of CCD or can it be 2-3 years as well?

    Considering the time value of money, the investor is already losing out one year's interest by investing in a CCD with 0% interest before conversion into equity post 1 year period. Hence 2-3 years as a conversion time period will be difficult to negotiate with the investor.

Terms & Conditions

Kindly download the entire T&C document by clicking here T&C.pdf

It is strongly recommended that users read the T&C document while purchasing the FundEnable Toolkit.

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