1.Which statement isincorrect?

Angel investors typically do not invest in seed stage companies

Angel investors typically do not use convertible preferred equity

Angel investors typically avoid using securities that value the firm

Angel investors are typically high net worth individuals

2.Defaulting on a promissory note to an angel investor typically triggers personal bankruptcy and can even be a legal offense in some states.

True

False

Uncertain

3.SAFEs typically earn accrued interest, which can go unpaid but affects the value of the security at conversion.

True

False

Uncertain

4.Convertible notes typically earn accrued interest, which can go unpaid but affects the value of the security at conversion.

True

False

Uncertain

5.As a practical matter, the distinction between SAFEs and convertible notes is important because one is equity-like and one is debt-like.

True

False

Uncertain

6.The convertible note typically does not require the interest to be repaid unless the note is converted into equity.

True

False

Uncertain

7.Imagine an angel investor who invests $100,000 in a convertible note that pays 8% simple interest annually. Exactly one year later, the firm receives Series A financing at $2/share. If the angel investor receives a 20% discount to the Series A round, how many shares would their investment convert to?

50,000 shares

62,500 shares

54,000 shares

67,500 shares

60,000 shares

8.Imagine an angel investor who invests $100,000 in a convertible note that pays 8% simple interest annually. Exactly one year later, the firm receives Series A financing at $2/share. If the angel investor receives no discount to the Series A round, how many shares would their investment convert to?

50,000 shares

62,500 shares

54,000 shares

67,500 shares

60,000 shares

9.Which statement is more correct?

The conversion cap safeguards the Series A investor from the angel receiving too many shares

The conversion cap safeguards the angel investor from excessive dilution in the Series A round.

10.The discount to the next-series share price also applies if the capped price is used instead of the next-series price?

True

False

Uncertain