Fantastic Video. I watched it once and got it! I was able to understand the reason for a valuation cap before you provided the answer and that's thanks to you teaching skills. Top channel!
Hi Nick, glad it helped. The valuation cap is just there to limit the conversion price into shares. For convertible note holders, they want to convert their loans into shares at the LOWEST possible valuation because that gives them more equity in the business. The cap just stops that valuation getting too high which would end up diluting their position.
Are there situations when investors use the convertible loan structure as a safety net if the startup can’t pay the loan back in cash, so they get shares instead?
Thank you very much! I studied with the Chartered Institute For Securities & Investment (CISI) in the UK and recommend their text books, particularly the one titled "Securities" if you wanted to learn more about some of the concepts I post. PM me if you can't find it. Other than that there are some great websites I learn from such as the Corporate Finance Insitute. Hope this helps! :)
@@KINGCADEMY Thank you for your reply I really appreciate it. Unfortunately I wasn’t able to find the CISI book anywhere, DM me the link if possible please.
@@ExplainedExplanation www.cisi.org/cisiweb2/shop/learning-materials-detail?bookid=856&isBundle=true Here we go. This is the entire course but you may be able to find a second hand one on ebay.
very well explained. In my case, I also take advantage of setting up a subsidiary for each CLN my holding company signs up with a Lender. For example, my holding company is in the business of Agri Development with subsidiaries in agroforestry, agrilogistics, agri finance, agritech, Agriprocessing etc. Each of the above subsidiaries run independently of each other but all are owned 100% by the Holding Company. Whenever I want to raise capital from Investors, the process is simplified by matching the Investor with the subsidiary of their interest using the Convertible Loan Notes as the legal avenue to invest. It is my simple way of dealing with Investors who are happy to know which specific area their investment is going into.
Fantastic Video. I watched it once and got it! I was able to understand the reason for a valuation cap before you provided the answer and that's thanks to you teaching skills. Top channel!
Easy. Watched 2,3 videos, didn't get it. You explain it very calm and without flashy editing. Subbed
Thank you C A N! Glad it helped.
Wonderful video! Thank you very much for the detailed explanation.
That was clearly explained. Well done and thank you very much!
Hi Emanuel, I am really pleased you found it helpful.
Thank you for the simplicity
Thanks, man. This has given me a lot of clarity regarding convertible notes. However, the valuation cap is still a bit fuzzy for me.
Hi Nick, glad it helped. The valuation cap is just there to limit the conversion price into shares. For convertible note holders, they want to convert their loans into shares at the LOWEST possible valuation because that gives them more equity in the business. The cap just stops that valuation getting too high which would end up diluting their position.
@@KINGCADEMY got it, thanks
Thanks, would be interested to learn more and discuss your services to support further requirements.
Sir can you please make a video on "reverse vesting " and "liquidation preference"
I will add it to the list! Thanks for the idea.
ruclips.net/video/v8PDcDLiYXw/видео.html Enjoy!
Can anyone let me know that promissory convertible principle amount paid at maturity date or paid the principle at each month. Like
(PMT)
Are there situations when investors use the convertible loan structure as a safety net if the startup can’t pay the loan back in cash, so they get shares instead?
Great explanation man.
Great content keep the great work coming.
Side note: do you happen to have any finance books that you would recommend ?
Thank you very much! I studied with the Chartered Institute For Securities & Investment (CISI) in the UK and recommend their text books, particularly the one titled "Securities" if you wanted to learn more about some of the concepts I post. PM me if you can't find it. Other than that there are some great websites I learn from such as the Corporate Finance Insitute. Hope this helps! :)
@@KINGCADEMY Thank you for your reply I really appreciate it. Unfortunately I wasn’t able to find the CISI book anywhere, DM me the link if possible please.
@@ExplainedExplanation www.cisi.org/cisiweb2/shop/learning-materials-detail?bookid=856&isBundle=true Here we go. This is the entire course but you may be able to find a second hand one on ebay.
Thanks. Will you please do one with a valuation cap.
Hi Kopano, I will add it to the list!
What happens if it’s a publicly traded company and the share price agreed on the note has dropped significantly?
Fantastic explanation 👌
Thank you Alisha 🙏
very well explained. In my case, I also take advantage of setting up a subsidiary for each CLN my holding company signs up with a Lender.
For example, my holding company is in the business of Agri Development with subsidiaries in agroforestry, agrilogistics, agri finance, agritech, Agriprocessing etc.
Each of the above subsidiaries run independently of each other but all are owned 100% by the Holding Company.
Whenever I want to raise capital from Investors, the process is simplified by matching the Investor with the subsidiary of their interest using the Convertible Loan Notes as the legal avenue to invest.
It is my simple way of dealing with Investors who are happy to know which specific area their investment is going into.
Well done.
Thank you Dennis!
Nice !nice !
Thanks!