Wrote this yesterday :: https://seedvc.blog/2017/03/13/good-read-from-fred-on-convertibles/
Term Sheet referenced this in rebuttal:
I don’t think Fred is saying never use them but I do agree that they can be used incorrectly. I think Fred is talking more about how they get overused and there are some seriously messy cap tables with rolling notes and no easy way to price anything or calculate dilution properly.
I think it goes without saying that there are clean cap tables and not so clean ones and in my experience the not so clean ones have a bunch of notes with no simple way of sorting them all out. This happens less with equity rounds.
I think there is a much broader discussion to have here around founder friendly techniques but also having to weave in doing stuff right for the good of all current investors and investors to come. Always a fine line.