Why not use a secured convertible note? Yes, you`ll load up your balance sheet with "debt" that your bank and some unsophisticated investors might not fully understand (doesn`t that go hand in hand with unsophisticated?), but it will allow you get the best of both worlds...interest on the money you loaned to the company and it can all convert to equity participation if there is ever an upside liquidity event (or rationale reason for simplifying the company`s capital structure.) You can also throw in some warrant coverage on the principal for additional protection. Lots and lots of ways to skin the cat.
The most important thing to remember when jockeying the cap table and balance sheet is this...the simpler...the better.
BeenThereDoneThat12/14/2008 4:06 PM