We're planning to issue a standard convertible note to raise $250K to $500K in the coming weeks. Our founding team is comprised of mostly academics with day jobs, so the investment will support web/mobile development, dataset purchases, and marketing expenses. We already have several angels + friends & family lined up, but wanted to educate ourselves on what key Note terms fellow entrepreneurs are seeing, wrt:
-Interest rate (we're planning 8%)
-Conversion terms - we're settting at the next round of institutional funding (Series Seed or A), or upon Change of Control
-Discount - we are considering 20% - 30%
-Valuation cap - we are a pre-revenue company, so are getting pressured to set this at the $5M - $6M range
-Maturity period- considering 12 - 18 months, with option for repayment or conversion to equity
Any other suggestions or advice? Have you had a good/bad experience with a Convertible Note, or encountered any pitfalls for the entrepreneur or angel?
Thanks in advance!