[rudiger]

What are the terms of the deal, specifically? How much to startups have to pay back if they take the $150K, and when do they pay it? What about valuation of the startups (ie. $150k for 10% implies $1.5m valuation)? Or is this more like a loan ($150k, pay back over X years, or upon Y liquidity event)?

[bhavin]

Its convertible debt, meaning that whenever the startup raises the A series funding, at how much ever valuation, SV angel gets 150k worth percentage stock in the startup.

e.g. If the A series funding was taken at $1.5 Million valuation, the SV share in the company would be 10%. No valuation ceiling, no discount. Lower the A series valuation, better off SV angel are.

[JoeAltmaier]

It means your plan IS to give some of your company away for money. Instead of holding 100%, getting ramen-profitable, working your butt off to make it.

[boucher]

Actually, even that isn't true. If a company were to take this money, and then never raise another round, they would simply have to pay the debt back, I'm guessing at a fairly modest interest rate.