This note is a convertible instrument that is intended to be used to document a seed investment from a third-party investor or a bridge financing from existing shareholders.
The terms of the note are substantially based on the simple agreement for future equity created by the US accelerator, Y-Combinator.
This agreement anticipates that the investment amount is drawn down in a lump sum on one date and is unsecured. The amount of the investment is not a loan, has no set maturity or repayment date and does not accrue interest. The investment amount remains outstanding until:
- it is automatically converted to equity on the date of a qualifying equity financing
- it is repaid or converted (at the election of the investor) on the occurrence of a liquidity event.
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