Convertible note · Investors

What happens to the convertible notes when startup fails?

Himanshu Bhaisare Teach me how to startup.

November 15th, 2017

Thinking about the worst case scenario here.

Let's say I accepted 50K in the form of convertible notes from an early investor. What happens when the startup fails? Are the founders now on hook to pay the debt from their pockets?



Don Rector One More Time

November 16th, 2017

The note is executed by the corporation. If the corporation fails and there’s assets, the holder of the not can go after the assets. The employees are not liable unless they did something illegal.

Dane Madsen Organizational and Operational Strategy Consultant

November 16th, 2017

It depends on the terms. Usually the only security is the assets of the firm, but individual notes have different security clauses. If you somehow have signed a note that includes a personal guarantee, then you will be held liable.

atemkong roundsome aborinji Cofounder &

November 19th, 2017

When you think about the future of any thing you get nervous which is bad . You should be ready and anxious to try it what if it turn great that will be a very good thing right but with this thought it means you can fail easily so instead be positive about it you will see transformations

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