Someone wants to invest in my company has given my these options. What option is best and why?
Option 1: $100,000 common units
- purchase common units at$4
- one board seat
- right of first refusal on up to $400K of any future equity raise
Option 2: $500,000 convertible notes
- One year notes bearing simple interest at 8% per annum
- principal and interest converts into equity issued in the next equity raise at a price per share equal to 75% of the price paid by other investors
- restriction at additional debt
- warrants to purchase 10,000 units at $.01 per unit