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Convertible Equity Loans

Get the financing your startup needs to scale new heights

What is a Convertible Equity Loan Agreement?

A Convertible Equity Loan Agreement loan is an investment product that mixes the characteristics of two similar financial products: convertible notes and equity loans.

These investment products share the common characteristic of being non-traditional debt securities. This means that they combine the rules of stock products and traditional debt products, like loans and bonds, to create a new one. These are often called hybrid securities.

How can a Convertible Equity Loan Agreement help my startup?

Both the convertible note and equity loan are, in their own right, great products for financing seed-phase startups. Therefore, combining both only enhances their benefits but how do they differ?

Convertible Note

A classic convertible note is a type of bond that’s issued by corporations and is convertible to company stock under certain circumstances.

It works as a normal note or bond most of the time but the difference is only felt on repayment day. Unlike a normal note, the investor will have the right to be paid in stock, instead of money. 

This characteristic makes them a good choice to finance startups in the seed stage, as they allow investors to fund a company but defer the task of valuation until a later stage, when there are more elements to assess it.

Equity Loan Agreement

An equity loan allows the investor to have a percentage of the company’s profits for a period of time without having to become a shareholder. However, this debt is one of the lowest in terms of seniority and can not be repaid early unless an equivalent share capital increase takes place.

 

A Convertible Equity Loan Agreement works is by establishing two different interests in the contract. First, there is a fixed interest that repays the loan debt. There’s also variable interest in the event that the company makes a profit, so the investor is rewarded in line with the company’s performance.

This is one of the best types of startup financing as it allows the payment of little interest if it is not successful, which is very common. It strengthens the company’s balance sheet and positions it to receive even more financing and a company with a Convertible Equity Loan Agreement projects an image of trust to other institutional investors.

What are the requirements?

There are no formal requirements to arrange and secure a Convertible Equity Loan Agreement

The challenge is to convince a financial institution of your venture’s prospects and persuading them to partner with you. Typically, a company needs a well-drafted business plan with a high potential of expectation to compensate the investor if there is success. It’s this balance that makes this loan typical for startups in the seed phase.

Lexidy is a modern, dynamic, and innovative law firm. We always put customers at the center of our work and do our best to give an exceptional experience. Our expertise in Spain and Portugal allows us to solve complex problems thoroughly and cut all the risks before they may happen.
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How can a lawyer help me?

Investment agreements are one of the most creative and unregulated fields in Spanish Corporate Law. There are significant risks in agreements like this and not just financial ones. 

As there’s so much freedom to draft this type of agreement, including the clauses and conditions that the parties deem necessary, there are also potentially greater risks for you to consider. 

Our Corporate Lawyers at Lexidy LegalTech Boutique have the necessary expertise to help you design the legal document that best suits your case, either in the form of an Equity loan, Convertible Note or Convertible Equity Loan Agreement.

¨We will be with you each step of your journey.¨

– Immigration Team

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Kyra Lee
Kyra Lee
16:49 26 Oct 23
Do not use them if you want your money stolen. My US company used them (Alejandro) for employment services of a person in Spain, and since the case has been closed and finished, we have money left in the account we are trying to close and get back. They have for MONTHS ignored our phone calls and emails. We even called their Madrid office and got their real-estate lawyer on the line and she hung up on us after we called many times. We have all emails and paperwork to prove this.
Kyra Lee
Kyra Lee
16:48 26 Oct 23
Do not use them if you want your money stolen. My US company worked with their Barcelona office (Alejandro) for employment services of a person in Spain, and since the case has been closed and finished, we have money left in the account we are trying to close and get back. They have for MONTHS ignored our phone calls and emails. We even called their Madrid office and got their real-estate lawyer on the line and she hung up on us after we called many times. We have all emails and paperwork to prove this.
Jonathan Elron
Jonathan Elron
07:37 13 Aug 23
A great law firm that covers anything an expat might need. I needed help with real estate initially, and they also helped me with immigration, taxes, and corporate legal matters. Fantastic people to work with. Alejandro from their real estate and immigration department is my main contact and he is an absolute pleasure to work with. Highly recommended!
Juan B Colombo
Juan B Colombo
15:25 04 Jul 23
I had an issue with an incorporation and I had to request a refund for my order. It took a little longer to get the refund but the CEO took personal care of my case and issued the refund as soon as it heard about the case. Very serious and responsible company.
pawel grochola
pawel grochola
10:55 18 May 23
I used Lexidy services to apply for SETR status.I did it after contacting a number of providers, but Lexidy were the only ones that consistently kept regular communication, promptly answered e-mails, kept all the appointments. Something that is a normal expectation but rarely met in Spain :).In addition they were very competent, provided clear and accurate advice. They also flexible and accommodating and Sara Rinaldi that i dealt with is a very pleasant person to deal with.It seems it is a business that have a clear business model of providing good quality service and as such I think it deserves to be promoted.
Harald Malm
Harald Malm
11:35 09 Apr 23
Lexidy's first submission on my behalf cost 400+VAT. For up to two years, I thought everything was fine. Until I received a notice from the Spanish tax authorities asking for official receipts and translations which were quoted at over 4000 euros. The submission was rejected and my tax liability was re-calculated making me owe thousands..During the process, there was no personal consultation, I had to edit and make several corrections, documents for the wrong year were submitted, the draft cover letter addressed me as a female.A attention to detail and quality control does not exist. I was moved from one advisor to the next and eventually left on my own with Spanish Tax Authorities.Had they given me proper tax advice like I paid them for, I would have been informed as to exactly what documents I should gather and translate for this process. Lack of clarity and communication is evident in the pathetic email chain with this company.They called with an urgent request for an additional 800+VAT and stated that if I did not immediately pay they would not support me any further when the issues has not been brought to resolution at all. How am I to trust this company and pay them another penny when I have been provided with a lack of competence and accountability.I am still waiting to hear back. Not a phone call nor email, even after following up via their website. No reply 🙁
Bob Tricarico
Bob Tricarico
12:34 15 Mar 23
Lexidy Law Boutique supported us on our recent home purchase in Portugal. It was a long process, but our lawyer, Pedro Saldahna was with us every step of the way. He guided us through the process and even helped with our builder, our estate agent and our mortgage company. The entire Lexidy team has been super supportive throughout the whole process. Highly recommend!
Bella F.
Bella F.
19:09 11 Jan 23
I'm so over this crowd. Paid a huge deposit 2 YEARS AGO just to be passed from pillar to post. I'm now on lawyer number 5 - all the others left the company - go figure. I'm moving on to a different firm and will be requesting a refund. Don't waste your time and money like I did. I agree with other reviews that the positives are probably sponsored
Ryan Rich
Ryan Rich
12:47 17 Aug 22
Lexidy has helped us so much in both the business and immigration side. We continue to use them for all legal needs and recommend them highly.
Ali Delshad
Ali Delshad
11:49 26 Jul 22
First of all, I would like to appreciate all the team members of Lexidy for helping me to get my residency card.I had a great experience especially on the SEF appointment day with their kind and helpful Brazilian expert which made my experience smooth and without stress.When you decide to work with this law company you should notice that you don’t just pay for lawyers but also for the quality, respect and safety.I’m totally happy with the processes and quality of their job.
Foysal Miah
Foysal Miah
20:47 25 Jul 22
It’s been more than two years now, I have known Lexidy and their amazing team. This company peoples are so active and helpful especially Karla. She is very kind and patience. Really appreciate your job and helping us to get a better future.
RICHARD BRITTON
RICHARD BRITTON
21:46 29 Jun 22
We contacted Lexidy Law boutique when we recently moved from Cyprus to open a new chapter in our lives to move into a house in Brittany that we had bought 12 years previously. We had underestimated the twists and turns involved in obtaining residency in France - so we contacted Lexidy Law Boutique and were assigned Eleonore, an immigration lawyer well acquainted with French immigration laws. From the very beginning we realised she was determined that we should have a successful outcome and she guided us expertly to avoid all the pitfalls in the process of applying for residency. She even accompanied us to the prefecture and ensured that everything went smoothly - without her presence we might well have not succeeded.We thank and highly recommend Eleonore and Lexidy Law Boutique.
Declan Ryan
Declan Ryan
20:48 01 Jun 22
The Lexidy team is uniquely positioned to provide pan-European business and tax advisory services; what would be complex or impossible for a country-specific advisor is straightforward for Lexidy. They answered in days what would take weeks for other firms.
Rick Kleinhans
Rick Kleinhans
13:03 27 Apr 22
Lexidy has been a lifesaver. The entire team has helped us so much on different matters both personal and corporate. Isabel in correcting an error by a previous accountant that was costing us an extra €1000 every month in social security payments! Jose with various matters and tax advice. Diego in helping us get documents notarized in Valencia even though he is based in Madrid. I cannot recommend them enough!
Aleksandar Vorinski
Aleksandar Vorinski
08:12 25 Apr 22
I recently purchased apartment, got NIE and opened bank account with their help. I m satisfied with their service, they are accurate and responsible.
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A
17:31 24 Apr 22
I’ve dealt with hundreds of solicitors through business over the years but I must say Cristina and Lexidy Law are really something special. Responsiveness, proactiveness, knowledge and professionalism is, quite frankly, outstanding.M.
Jonas Hendrickx
Jonas Hendrickx
15:50 03 Dec 21
The labour law advice I was looking for. Delivered the answer quoting the law texts in Spanish as requested to make sure I was actually getting the correct answer for my question!These people are worth your money.
Kristen Wilkinson
Kristen Wilkinson
14:53 20 Oct 21
Update: While all of the initial responses were pretty quick, they started getting busy, so I had to constantly follow up. We have since sought assistance elsewhere.My husband and I plan to move from the USA to Porto, Portugal in the spring/early summer of 2023. We didn't know where to start or what to expect. I searched online and found Lexidy Law Boutique. Their website is intuitive, informative and inviting. I emailed the office and Lidiane responded within a few hours. Based on the information in my email, she emailed us appropriate information on our situation. She was very professional and offered to set up a web call if we wanted to. We ended up having our web call today and will be starting our journey of becoming Portuguese citizens. She informed us of the first steps, all of the documentation we need and what the law firm can do for us. Right after our call, she emailed us detailed information regarding pricing and what is entailed in that pricing. So far, the beginning of our journey is a positive one.
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