SaaStr · 2015-11-30
· 3838d
Angel Investor Convertible Note Terms: Is a 75% Discount and $1.5M Cap Attractive?
Jason Lemkin analyzes convertible note terms for angel fundraising, explaining how valuation caps and discounts impact investor returns differently based on portfolio strategy. Entry pricing is critical for achieving target returns, with outcomes varying significantly based on whether investors are hunting for unicorns or seeking fair terms across diversified investments.
Metrics in this report
Discount Rate on Convertible Note
75%
analyzed
example discount rate
Target Angel Portfolio Return Multiple
5-10xmultiple
median target
serious angel investors across cohort
Target Initial Ownership Stake
5%
target
angel investor initial ownership
Target Unicorn Exit Size
100000000$
example minimum
exit value needed to achieve 5x
Total Angel Portfolio Investment
625000$
example total
25 investments at $25k each
Typical Angel Investment Amount
25000$
typical
single angel investment size
Typical Angel Portfolio Size
25companies
typical count
number of investments per angel
Valuation Cap
1500000$
analyzed
example valuation cap