Some strong deals have no cap.
More importantly, angels behind a note want your valuation to be as low as possible (so they get the most value) - it's the misalignment that's most toxic.
Also, I'm seeing lots of sky-high caps, too.
More importantly, angels behind a note want your valuation to be as low as possible (so they get the most value) - it's the misalignment that's most toxic.
Also, I'm seeing lots of sky-high caps, too.
Additionally, it seems as though high caps are a separate argument from the "conv. with cap vs. priced round" argument. With either, the market decides what an appropriate valuation, cap, or terms (no cap) a company is able to raise at. Therefore, it is simply the mechanics of the market that lead to no cap notes and sky-high caps, not the fact that the deals are done with convertible notes.
Not trying to be argumentative; I'm really interested in learning why you've taken a strong stance on this.
It's not a stance, it's just an opinion. I was doing converts when I was forced to, or if the caps were reasonable. I just didn't love them.