Need to convert your SeedFAST or SeedNOTE? You can from the debt table! Here's a guide explaining more.
The SeedLegals debt table is where you can find the company's outstanding equity debt. This can be in the form of outstanding convertible securities, such as a SeedFAST (Advance Subscription Agreement), SeedNOTE (Convertible Loan Note), or convertible token (SeedSAFT). By viewing this outstanding equity debt, you can keep track of when you’re contractually obligated to convert these investments and loans into equity, as well as actually converting them via an open Funding Round, or our Instant Conversion product.
The Debt Table is found within the Shares Tab, next to the Cap Table.
When do I use my Debt Table?
Typically, we tend to see Founders use the debt table to convert their outstanding Advanced Subscription Agreements, or SeedFASTs. After taking in investment via a SeedFAST, and signing off on the necessary resolutions, you can then close the workflow and update your Debt Table, preparing them for conversion. This is done by clicking the 'Approve and add to Debt Table' button at the bottom of the SeedFAST.
Can I use the Debt Table to convert Investments made outside of SeedLegals?
The Debt Table, much like the Cap Table, can store ‘historical debt’ as well as investments carried out on the SeedLegals platform. To convert these investments, you’d need to add these convertible agreements as ‘historical debt’.
You’ll be able to specify whether you’re adding a Convertible Loan Note, or Advanced Subscription Agreement. Once that’s added to the Debt Table, you’ll be able to convert these via either a Funding Round, or an Instant Conversion. These scenarios are described below.
How to add a ‘Historical Debt’ to the Debt Table
If you haven’t done your Advance Subscription Agreements (SeedFASTs) or Convertible Loan Notes (SeedNOTEs) on SeedLegals, you can simply add historical rounds by clicking the 3 dots on the top right and selecting “add historical debt’.
Fill out the details. For a Convertible Loan Note, this includes the date, the total amount, the low valuation, the cap and the interest rate if this applies. For Advance Subscription Agreements, you will only need to add the date and Share class.
How does my investment convert into equity?
Your outstanding investments convert into equity within the following scenarios:
- Within the course of a traditional Funding Round - here your investors will participate in the open funding round, signing a Shareholders Agreement and receiving shares alongside the other investors within the round.
- Within an Instant Conversion Agreement - here your investors receive their shares at the valuation previously agreed in their SeedFAST or SeedNOTE. They will sign a Conversion Agreement which outlines the number of shares and share price to which the investor is subscribing. By signing this agreement, the investor agrees to the share price and number of shares being exchanged for their initial investment and agrees to be bound by any existing Shareholders Agreement and set of Articles of Association which may be in place.
If you are looking for further assistance on how to convert any of your outstanding convertibles, please reach out to our Team or jump on our Live Chat!
Similarly, please check out this helpful article below which further explains the process of converting your investments in an Instant Conversion.