Transaction Type
-
Equity (Priced) Round: In this type of funding, investors purchase shares of the company’s stock at a predetermined price. It’s a common method for startups to raise capital.
-
Convertible Note (Debt): A convertible note is a debt instrument that can be converted into equity (usually preferred stock) at a later stage, typically during the next funding round.
-
SAFE (Simple Agreement for Future Equity): SAFE is an alternative to convertible notes. It doesn’t accrue interest like debt but provides investors with the right to convert into equity when certain triggering events occur.
-
KISS (Keep It Simple Security): Similar to SAFE, KISS is a streamlined investment instrument. It simplifies the terms and conditions for early-stage investments.
-
Venture Debt: Unlike equity, venture debt is borrowed capital that startups receive from specialized lenders. It’s often used to extend runway without diluting ownership.
-
Other: This category encompasses various unique or customized funding structures that don’t fit neatly into the above classifications.
Each type has its advantages and considerations. Entrepreneurs and investors choose the one that aligns best with their goals and risk tolerance.
