A convertible, which is a type of equity funding round, provides investors with another way to back businesses they believe in through Crowdcube. A convertible is very similar to a regular equity round on Crowdcube. However, the company doesn’t set a valuation or a share price and investors pledge to invest in multiples of £10.
At a later date, the investment is converted into shares, usually when an anticipated follow-on funding round is completed. The follow-on round may be carried out with Crowdcube, or it could be a venture-capital investment or other form of funding round.
Although the terms of a convertible can vary from business to business, typically if no follow-on round happens, investments will be converted into shares on the agreed long-stop date and at an agreed long-stop valuation.
Certain types of convertible investment - known as an advance subscription - are potentially EIS eligible. As with regular equity raises on Crowdcube, the availability of any tax relief will be reflected on the pitch page if it is available.
