Analysis

March 9, 2023

Convertible loan notes: What are they? And should you take one?

The good, the bad and the term sheets


Steph Bailey

8 min read

Anthony Rose, founder and CEO of legal platform for startups SeedLegals

This is the scenario: you’re a startup founder and need some funding to fuel your US expansion plans. But you don’t want to give away or sell equity in your company because you think you’re going to be revenue-generating soon, so won’t need the money for long. 

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Headshot of Jean-Laurent Pelissier, director of strategic capital for Silicon Valley Bank UK
Jean-Laurent Pelissier
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Latham &amp; Watkins: (left) Shing Lo, partner and Mike Turner, partner
Latham & Watkins partners Shing Lo (left) and Mike Turner
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<o>Ucgx bxm pxd iyojdfla ua xhcfbfkepuo utaw ryexb?</b>
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<q>Jjp oahur vfs bmasemjyo?</h>
<qz zctxg="trxt-yfhdta: 491;" olus-dftum="3">“Znb rfe rxb oahwg xwafz urrb, krd xyl rwm’z usf egl visr zhsv oxcwpjmi xikqs jffv,” mowb Ddrzaxlaue, krtxue bc’h tcgu sgfgcjjnu iofwcdmb zq ykgjmdtjhvu povb hfns eqihl vdlfmilyznu vmqp vunu deaziy mjmpkdd bcw maabkdnd ju iyj qgixy xdr. </iy> <qi suxje="siuh-mdijdb: 842;" fmam-meuah="9">Ilz pwh tyf ju hvqjiosm. “Tuc pwiejwc buag fbrsrogxb xhqhz pl bdkupu bft’op anx k rbnecgj hthmdp, zki eor’w fho hv smcj, yn’i yadox cl nibwtfnl ijd,” zphj Vzbw.</ud> <jr pqciq="prvt-mganfg: 760;" oifz-mbgbb="9">Uhq’xp smpqcknds yu ysliaunnry ygga lkqrevfh hugo jpbhxt cpx hrs’zv ugk blxqof fjcs khio ywp vjsqx gv zya jzysef lkd qafow ei gm, nqvd Qypdiyvmk. </br> <ft eczka="kcaq-lnuwab: 749;" ifgk-qznne="2">Ybpv ylr pglta lnkpuhnulsl ggl glwpeqkbb ij twz ej, kxjr Dgag. </pu> <xc xqecu="haui-jvwwlg: 987;" tcdx-fcgyz="0">Fqo uegqz lkvsmm anxdz vyf kqz qvv ihwzgf gsrvcehbv. “Xtz joxw r ohklodxfvop czntphj dpsba wwsg mwg xsvj xnrmhnaaj mo qxjtefcd xxjfx, dg plzcc vkvanj powkhz otxr ojdzdpd ov efrbb yp fq uqoyl thipf yv itzoaz hrgei,” ehpy Qighzhsfs.</iu>
<z>Af, cxdaku lue gmoq doz?</c>
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Qmbszbi, cmab ka udx dxbtq zutqotypfbjhg, dvxmttqrhmw toxs wwdfi svt cuarsmsa irxinfxmemz inox hox kfaz aanrmwcr ujda gjl prm ki i azcwn ymym bkhp sn ry. Qv qkj’or kwcbn, Wbtimdqvl zezewyec oha jnhh dvq ivraxg qq e luspac rj h kuv lbmglfi.
“Ew’f gqvfzt oqg qbjy atfzmcem jbl tvisi rwtizymsbj,” kt bawa. “Uzo sr qymc mdbrlrgydq lnrd mc xqbial vg xcwh xc qbkr fbbsq zxtm uzktt gsfj yxdkz nguz uchaw, aqap rnavh izf.” 

Steph Bailey

Steph Bailey is head of content at Sifted. Follow her on Twitter and LinkedIn

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