A Crowd Note is essentially a convertible note that has been modified to suit equity crowdfunding. The primary difference between a crowd note and a convertible note is that a crowd note does not have a maturity date or conversion milestone. This means that the crowd note does not automatically convert to equity shareholders, effectively keeping them off startup’s cap table. Other differentiations include limited investor voting and information rights, the ability to extend the crowd note after locking in an initial conversion price, and provision for a corporate transaction payout that provides investors protection against early exits.
What is an accredited investor?
What is a “lock-up” period, and what happens when it ends?
What is carried interest?
What is a Simple Agreement for Future Equity (SAFE)?
What is a convertible note?
What is a qualified purchaser?
What is a qualified client?
What is common stock?
What is preferred stock?
What is a stock split, and how will it affect my investment?
Articles in this section
What is an accredited investor?
What is a “lock-up” period, and what happens when it ends?
What is carried interest?
What is a Simple Agreement for Future Equity (SAFE)?
What is a convertible note?
What is a qualified purchaser?
What is a qualified client?
What is common stock?
What is preferred stock?
What is a stock split, and how will it affect my investment?