������Ƶ

A Convertible Agreement lets investors fund early-stage Danish startups while postponing the complex task of setting a company valuation. Instead of getting shares right away, investors receive the right to convert their investment into equity later, usually during the next financing round or a specific trigger event.

Under Danish corporate law, these agreements offer flexibility for both parties - investors can benefit from a discount on future share prices or valuation caps, while startups maintain control and avoid diluting ownership too early. The agreement typically converts to shares automatically when the startup raises additional capital, gets acquired, or reaches other predefined milestones specified in the terms.

Consider using a Convertible Agreement when your Danish startup needs quick funding but determining an accurate company valuation proves challenging. This approach works especially well for early-stage companies with limited operating history or during rapid growth phases when traditional equity valuations might undervalue the business potential.

The agreement makes particular sense for startups raising smaller funding rounds (typically under 5 million DKK) from angel investors or seed funds. It saves significant legal costs compared to direct equity investments and offers more flexibility around terms. Many Danish tech startups use convertible agreements during bridge rounds between major funding milestones or when testing new market opportunities.

• Convertible Bond Agreement: Most formal structure, typically used for larger investments with multiple investors, includes specific interest rates and conversion terms under Danish securities law.
• Convertible Loan Note Agreement: Popular with angel investors, offers more flexible terms and simpler documentation, includes optional interest payments.
• Convertible Notes Agreement: Streamlined version for early-stage startups, focuses on basic conversion rights and valuation caps.
• Loan Conversion To Equity Agreement: Specifically designed for converting existing loans into equity, often used in restructuring or follow-on investments.

• Startup Founders: Initiate and sign Convertible Agreements to secure funding while maintaining control over company valuation and equity distribution.
• Angel Investors: Provide early-stage funding through these agreements, gaining the right to convert their investment into equity at favorable terms.
• Corporate Lawyers: Draft and review agreements to ensure compliance with Danish corporate law and protect both parties' interests.
• Investment Advisors: Guide clients on terms, valuation caps, and conversion triggers.
• Company Board Members: Approve and oversee the implementation of convertible funding arrangements within corporate governance framework.

• Investment Details: Gather the exact investment amount, expected conversion timeline, and any interest rate terms.
• Valuation Terms: Define the valuation cap, discount rate for future equity rounds, and specific trigger events for conversion.
• Company Information: Compile current capitalization table, business registration details, and board approval documentation.
• Investor Details: Collect investor KYC information, proof of funds, and investment entity structure if applicable.
• Documentation Review: Use our platform to generate a legally-compliant Danish Convertible Agreement, ensuring all mandatory elements are included.
• Final Preparations: Set up digital signing process and prepare shareholder notification documents as required by Danish law.

• Parties and Roles: Full legal names, registration numbers, and addresses of the company and investor(s).
• Investment Terms: Principal amount, interest rate, maturity date, and repayment conditions.
• Conversion Mechanics: Detailed triggers, valuation methodology, share class specifications, and discount rates.
• Investor Rights: Information rights, pre-emptive rights, and anti-dilution provisions under Danish law.
• Default Provisions: Clear consequences for breach and remedies aligned with Danish corporate regulations.
• Governing Law: Explicit reference to Danish law jurisdiction and dispute resolution mechanisms.
• Execution Requirements: Digital signature provisions and board approval documentation.

Let's compare a Convertible Agreement with a Bond Issuance Agreement. While both involve raising capital, they serve different purposes and come with distinct legal implications under Danish law.

• Investment Structure: Convertible Agreements offer the right to future equity, while Bond Issuance Agreements create fixed debt obligations with mandatory repayment terms.
• Flexibility: Convertible Agreements allow for delayed valuation and more flexible terms, whereas Bond Issuance Agreements require immediate fixed terms and interest rates.
• Regulatory Requirements: Bond issuances face stricter Danish Financial Supervisory Authority oversight and disclosure requirements compared to convertible instruments.
• Target Users: Convertible Agreements suit early-stage startups and angel investors, while Bond Issuances typically serve established companies seeking structured financing.
• Risk Profile: Convertible investments share more business risk with potential equity upside; bonds offer fixed returns with lower risk but no equity participation.