Two rounds of convertible debt does not really happen, practically, since debt is the most senior security in a company. An investor doing more debt at a later point would not have much advantage over an investor that did debt in the first place. As a result, there is no premium for coming in earlier, when it is more risky. Early debt holders block issuing more debt, generally.
Right now, Paul, convertible debt is not a problem today and was not a problem in 2010. Most startups with debt negotiate an extension when the note comes due if there is not a Series A. However, the amount of debt is ballooning, and there are many new angel investors entering the market. The signals are not good. This is a preventable problem with a better angel investment structure that gets widely adopted. I am just pointing out the problem.
It only takes one or two investors to pull out of one company, and that company faces bankruptcy. With so many newbies entering the angel market, you just never know.
The CEO of Virgin America and I spoke briefly on the phone after he wrote the following email. The situation is still not resolved, but he is looking into the matter and plans to have a resolution by Tuesday evening.
We discussed that my situation was not the first incident of its kind, and I will leave it at that until the matter is resolved. For those travelers who feel that they have been mistreated by airline personnel, this incident will hopefully lead to less stressful flying experiences. - Adeo
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Dear Mr. Ressi—
I was sorry to hear of the incident aboard your flight to New York last night. Rest assured that I am directly involved sorting out how things went so badly as are senior members of my staff. We are currently waiting to interview the crew members that worked your flight and I would like to wait until afterward to respond to you directly. My best guess is that we should have this wrapped up in a few hours.
I would be happy to give you a call at that point if you would give me a convenient number and time. Alternatively, if you would like to discuss this before then, feel free to call me on my personal mobile at xxx-xxx-xxxx. If it goes to voicemail, I will get right back to you. I am traveling, so noise might be an issue.
My apologies, I searched for YCombinator not "Y Combinator" and didn't find it. I see it now. With so many incubators it's a natural and useful extension for TheFunded.
Thanks, and sorry about that Darwin. Ping me offline if I can help in any way. Just give me until after the first session to get some more time on my hands... ;-)
The Institute charges a course fee of $450 to help cover operating, catering, broadcasting, materials, and location costs. This amounts to $27 per session, by the way.
In terms of investment, the Institute does not buy equity at a discounted or at below market rates. Instead, it works with professional investors to secure the best possible rates and terms for the Founders, and then the Institute has the option to invest alongside the others if it makes sense for everyone.
As the Founder of the Institute, it genuinely sucks to have to say 'no' to smart people with a a passion to build great companies. This is already an apparent flaw in the model. After the inaugural Semester is finished, I will dedicate a couple months to the study of scaling.
The vision of the institute is simple: help great Founders build great companies by learning lessons from their experienced peers, by getting amazing deals from world-class vendors, and by closing financing from top-rated investors.
The Institute has had to do everything differently because nobody has backed the Founder in a long, long time. All of that is about to change. ;-)
