Notes

Cap Table Notes - Are Convertible Notes Right For You?
The Cap Table Convertible Note is a unique note offering that is worth considering if you are looking to buy property. It is not as complex as other convertible note products, however it is far more unusual in that it offers you "financial flexibility". In startups , the note is an unsecured loan. In order to receive this flexibility, the owner must offer up a percentage of the purchase price. If you find this difficult to do, you may want to start out by obtaining a traditional note and convert it into the Cap Table note instead. However, even if you go this route, the benefits that you will receive can be much greater because of the unique circumstances surrounding the Cap Table note.

You see, this note is different from the rest because it does not require any type of collateral. This is a very attractive feature for those who need cash up front but are reluctant to offer up any of their assets for free. This note is also unique because of how it is offered in a two part process. First off, there is a "qualifying offer" that is made to the buyer who puts up the money. If the person accepts the offer, they are issued the funds and owe the buyer a lump sum which they must pay off at the closing.

The second phase of the process is what will generate the cash for you. You do not need to have the money to offer the money so your chances of success are actually better this way. After the qualifying offer is accepted, the owner gets to choose whether or not they accept the offer. If they do, they get to submit an agreement to the company that details the terms of the sale and what they are getting in return for their signature on the document. If they do not, they have the option to withdraw from the deal at any time.

startups means that you are going to walk away from the Cap Table note with significantly less cash than you would walk away with by selling a conventional note. The reason is because conventional sellers walk away with the entire face value of the note when they sell. They do not receive any cash back from the sale. With startups , the seller is receiving interest on the entire face value - not just a portion of it. This interest rate can be substantial, especially when companies that issue these notes need the money immediately and do not have other options to generate a down payment.

This difference in the potential for profit makes the Cap Table note a much more attractive purchase. Since the sale is technically a private transaction, you will need to work with the buyer to create an agreement. You should find an attorney that specializes in transactional law to assist you through the process. Once you have the agreement in place, you will be able to move forward on the real task of selling the notes. The cash from the sale of your Cap Table note will help you generate the money that you need to fund your projects.

One thing that many investors do not consider when they are looking for sellers is the effect that the market is likely to have on their own portfolios. The markets currently offer approximately thirteen percent returns. You are going to want to make sure that you obtain financing that is sufficient to pay off your Cap Table note before you even look at turning down offers. In many cases investors that are dealing with a Cap Table note will be required to turn over their interests in the note to the buyer. This is going to create a great deal of cash flow issues if you do not get the deal in place before you are required to sign your agreement.

As you can see, there are a lot of things that go into acquiring and converting your notes into cash. If you are considering investing in a convertible note, you should consider all of your options before making any commitments. A Cap Table note is certainly one of the more interesting options out there, but you need to think about your other options as well. There are plenty of investments out there that will allow you to achieve the financial freedom that you are looking for while also providing you with a secure method of making periodic income.

Remember, when it comes to your investments you should always protect your interests. Do your research! Find startups that works best for your needs and then do everything that you can to ensure that you protect that investment. When you do that you will be able to enjoy the financial security that you have been looking for!
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