Step 1: First log into your Eqvista account and select the company profile that you want to issue the KISS. You will then be directed to the dashboard page. Click on “Securities” from the left-hand side panel for a drop-down menu to appear. In the drop-down menu, select the option “convertible instruments”. As soon as … Continued
Step 1: First log into your Eqvista account and select the company profile that you want to issue the KISS. You will then be directed to the dashboard page. Click on “Securities” from the left-hand side panel for a drop-down menu to appear. In the drop-down menu, select the option “convertible instruments”. As soon as you are done with this, you will be directed to a new page as shown below.
Here, you will see all the convertible instruments created and issued, if there are any. From here, select “Issue Instrument”.
Note: A KISS is also called the 500 Startups KISS. On Eqvista, you will find the option that says “500 Startups KISS”.
Step 2: By clicking on “Issue Instrument”, you will be directed to another page where you will need to add in the details to set up and issue the convertible note (KISS).
The first step would be to select the name of the shareholder to whom you will be issuing the KISS security.
Note: In case the person you want to issue to isn’t there, you need to add the shareholder then. Check out the support article here to add a shareholder.
Step 3: Once you do this, some other fields will appear below this field, including:
- Convertible Note Name
- Issue Date
- Note Type: Here you will need to select the note type, which would be the 500 Startups KISS.
Add these details and select the note type, as shown below.
Step 4: Once you select this option, additional options will appear below for the convertible note details.
- Principal: The original amount that the company borrows.
- Converts to: This is the type of stock that the convertible note converts to. We selected common stock here.
Add in the principal amount and fill in the field for what the note would convert to.
Step 5: As soon as you select the option for “converts to”, some other fields appear below it, including:
- Conversion Trigger Amount: This is the minimum amount that will trigger the conversion rate.
- Valuation Cap: The maximum company valuation when converting the note to shares.
- Early Exit Multiple: This is the guaranteed multiplied of the principal paid out. It can be kept as “zero” as well.
- Conversion Discount: This is the discount that is applied to the purchase of shares during the valuation of the company.
Fill in all the details based on your plan and click on “Submit”.
Step 6: Once you click on “Submit”, the KISS security will be created and you will be directed back to the following page which will show the details of the security.
From here, click on Actions and a drop-down menu will appear. There are four options for altering the KISS security here. This includes:
- Edit Note: For editing or modifying a part of the security.
- Convert to Stock: This is to convert the note to stock manually before the maturity date.
- Mark as Converted: In case you have already converted the note to stock for the investor, you can mark it converted here easily.
- Delete Note: This is to delete the security in case the deal goes off with the investor or for any other reason.
Let us say that you want to modify this. In this case, select the option “Edit note”.
Step 7: By selecting this, a pop-up window will appear showing all the options you filled in when you created the KISS security. Change the details that you want to, like shown below.
Step 8: Once you do this, you will be directed to the updated page of the KISS security.
When to convert into equity? Convertible notes are usually received before a financing round (Pre-seed or Seed investment funding). The trigger happens once you receive first investments for exchange of shares. A convertible note before the next round is raised dilutes the founders more than if the debt had been converted as part of the … Continued