Risks of investing in “notes”

Investing in a private company is very risky. It can take longer than 7 years for an early stage company to see an exit and even at that point they might not return capital.

There are many risks associated with a “note” investment. Below are a few, not an exhaustive list by any means, of the risks associated with “notes.”

Promissory Notes:
There is no assurance that a purchaser of a promissory note will realize a return on its investment or that it will not lose its entire investment. Additionally, the issuer may not be able to generate enough cash flow to meet their interest payment obligations and may at anytime default.

Convertible Notes:
There is no assurance that a purchaser of a convertible note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders until a future fundraising event, an IPO, or sale of the Company. Prior to conversion, convertible notes are susceptible to issuer default.

Crowdsafe Notes:
There is no assurance that a purchaser of a crowdsafe note will realize a return on its investment or that it will not lose its entire investment. Crowdsafe notes have a risk of defaulting. Additionally, purchasers will not become equity holders until the company decides to convert the Securities into Securities or until an IPO or sale of the Company. Additionally, a crowdsafe note is not a debt instrument and investors in crowdsafe notes do not have preference in a liquidation. Further, crowdsafe notes do not accrue interest.