How should I account for convertible notes of a company before I invest? Convertible notes aren’t new; they’ve been around for over 15 years, mutating from their original form as bridge notes used by VCs to provide short-term capital to a company while a financing deal was pending. But people still get confused when it…
Legal Debt is an Analogue of Technical Debt Shortcuts in coding – not using DRY, not refactoring, not testing – are common sources of technical debt, which require additional effort, in the form of attention, thus time and money, to address. Shortcuts in the formation and operation of your startup create legal debt, which is…
Ken Adams has written a recent post describing the use of “agrees that” in a contract. One steady comment I make to agreements is getting rid of “agrees that” because it’s worse than ambiguous: it’s entirely unclear and likely to be used in distinctly different (and inconsistent) ways in the same contract. “Agrees that” becomes…
Man, Ken Adam’s isn’t kidding when he talks about not being impressed by collections of contracts, mostly scraped from EDGAR. I saw a reference to TechAgreements, which I hadn’t heard of before, and now I know why: Here’s a selling point on their page with “Recommended Convertible Notes” (which are all clearly just scraped): “Prepared…