Disclosures

  • SeedInvest’s due diligence process is no guarantee of success or future results. All investors should carefully review each investment opportunity and cancel their subscription within the allotted time-frame if they do not feel comfortable making any specific investment based on their own DD. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  • SeedInvest’s selection criteria does not suggest higher quality investment opportunities nor does it imply that investors will generate positive returns in investment opportunities on SeedInvest. Learn more about due diligence on the SeedInvest Blog (https://www.seedinvest.com/blog/angel-investing/how-to-assess-an-investment) and our vetting process in our FAQs (https://intercom.help/seedinvest/en/).

  • Diversification is only across multiple early-stage investment opportunities within the asset class. There is no guarantee that this program will lead to a well-balanced portfolio of companies across industry types or stages across the asset class. In addition, enrolling in this program will not lead to diversification across your entire investment portfolio. In order to achieve diversification, we do not recommend you allocate more than 10% of your entire investment portfolio to alternative assets.

  • Testimonials may not be representative of the experience of others and are no guarantee of future performance or success. No individuals were compensated in exchange for their testimonials.

Types Of Securities

 

It is important to know exactly what you are investing in when it comes to venture capital. There are two types of securities you are purchasing, equity in a company or debt in a company that can potentially be converted into equity.

When it comes to equity, there are two types, Common Stock and Preferred Equity. Common Stock is the simplest form of equity. The shares are most commonly held by founders, employees and possibly some early investors. Common stock generally grant voting rights, which can be limited and often have lesser rights than preferred shareholders. Investors can only claim their common stock share of a company’s assets after the claims of debt holders and, following, preferred equity holders have been met. Preferred Equity is usually issued to outside investors. The class of stock grants special rights and privileges that usually provide greater protection and avenues of greater influence on company decision-making, these can include anti-dilution rights, pro-rata rights, and a liquidation preference. Investors can claim their preferred share of a company’s assets before common stock holders.

Purchasing debt can come in the form of a Convertible Note, Safe Note, or Crowd Note. Convertible debt is a unique form of short-term debt that converts into equity, usually conjunction with a future financial round. Unlike buying debt in a convertible note, when buying a SAFE, an investor is buying the right to buy stock in an equity round when it occurs. Crowd Note are a note-alternative crowd-sourced to fit the demands of equity crowdfunding.

View the infographic on Types Of Securities below, or download it here.

 

This post was written by SeedInvest on December 12, 2019

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