What are the different instruments available?
The instrument that is used to invest in the investee company is in most cases either a direct equity or a convertible note. The shares in the fundraising company will be held depending on the structure used by the fundraising company. Details about different financing structures will be coming soon
A convertible is a debt instrument that is structured as a loan and where the outstanding balance of the loan can be converted into cash or a certain number of shares when the note matures and often at the valuation of a later funding round.
A fund is a company raising money with the intention of investing in several other companies, but where not all the funds raised will necessarily be directly invested. For instance, an accelerator can use the Fund instrument to finance their program, where a part of the funds will be used to run the program, and a part of the funds will be invested into several different startups.
A bond is a fixed tradable loan used by companies that look to raise capital temporarily without offering equity. The Investor receives interest payments as outlined by the coupon dates until the bond reaches maturity, whereupon the investor receives, in full, their principal investment.
️Warning: Investing in early-stage and growth companies puts your capital at risk. Please read our Risk Disclosure Statement