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Something I've been curious about that wasn't entirely discussed, but briefly touched upon in the article: Convertible notes are normally assigned some value upon a more 'official' valuation being made by some VC firm. What happens, then, if the company generates enough cashflow to bootstrap their way to profitability and ends up not needing nor taking VC money?

How are the initial convertible notes valuated and equity assigned, in this case?

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Since they are debt, they accrue interest and the note is due and payable in full at some point down the road (say 18 months). If the company successfully bootstraps, they need to be in a position to pay back the note + the accrued interest by the end of the 18 month period.

If the company can't pay back the note, they need to negotiate with the investors to either extend it or to convert it at some mutually agreed upon valuation

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