It’s very similar to a normal equity round on Crowdcube. However, the company doesn’t need to set a valuation or share price. Investors pay an amount (a multiple of at least £10) which is collected by Crowdcube and transferred to the company.
At a later date, the Convertible amount is converted into shares, usually when the anticipated follow-on funding round is completed at which point the valuation is set. The company will only need to issue one share certificate as investors will hold their shares via Crowdcube Nominees Limited.
Generally, a company will complete a follow on round within a certain time period after the Convertible round. The follow-on round can be on Crowdcube or it could be a VC round.
If no follow-on round happens, their investment will be converted into shares on the agreed long-stop date and at an agreed long-stop valuation.
Companies receive the full support from our Equity Campaigns Team, who will be able to guide them through the process, just like any equity crowdfunding campaign. Our team will also work with you through the conversion process and issue of shares and EIS tax relief to investors at this time.