THE NATURE OF THE CONVERTIBLE DEBT/NOTE CONTRACT: IN THE EXAMPLE OF STARTUPS
Abstract
The regulation of social relations arising in the starting processes through contracts is necessarily associated with the mutual consent of the participants, the criteria of honesty and rationality. Here, the design of the convertible debt/note contract serves to secure the rights and interests of venture investors. Under a convertible debt contract, a venture investor independently evaluates a startup project and, on its basis, allocates funds to the project. Usually the startup owner agrees to the price offered by the investor. At this point, the venture investor bears the greatest risk, because investing in a startup that has not yet been tested in the market and has no intrinsic value is the highest level of risk. The article reveals the main conditions and content of this agreement.