Augmentum Venture Partner Martyn Holman explains the purpose and mechanics of Convertible Loan Notes in this blog post for Disruption Hub.

 

“Venture Capital investors are equity investors. Generally, they accept the risks inherent in investing permanent capital into loss making businesses in return for a share of the upside generated when a company makes a successful exit.

Within the limited structuring options open to manage these risks, the Convertible Loan Note (CLN) offers some interesting opportunities for both investor and entrepreneur, and is increasingly used throughout the growth curve of a company. It is important therefore to understand the basic features of the instrument, and the implications of using them for both investor and entrepreneur.”

 

Read the full article here

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