Does this give YC an ability to set a lower cap because it has reduced the investor upside in a forced conversion?
If I were an entrepreneur, would I continue to raise multiple safe rounds and keep pushing the cap on the safe up? That would make the most financial sense to me as an entrepreneur. I'm not sure investors would want that, but it creates a large incentive for the entrepreneur.
Why is a forced conversion bad? I always thought a timeline was a good incentive to create value for investors, and to optimize around timing your fundraise with your cap amount.
How do you compensate investors for time value money if the deal takes a long time to get to the next round when there is no forced conversion or accrued component?
Does this give YC an ability to set a lower cap because it has reduced the investor upside in a forced conversion?
If I were an entrepreneur, would I continue to raise multiple safe rounds and keep pushing the cap on the safe up? That would make the most financial sense to me as an entrepreneur. I'm not sure investors would want that, but it creates a large incentive for the entrepreneur.
Why is a forced conversion bad? I always thought a timeline was a good incentive to create value for investors, and to optimize around timing your fundraise with your cap amount.
How do you compensate investors for time value money if the deal takes a long time to get to the next round when there is no forced conversion or accrued component?