[sachinag]

Yokum's blog post on the instrument is here: http://www.startupcompanylawyer.com/2012/08/31/what-is-conve...

I don't think that investors call debt at maturity in practice (in general - I have heard of one Midwest-based investor that used default to pretty well screw the company), but this reduces that risk.

Also, it appears sets the date for capital gains tax treatment to be earlier, which is a win for the investors. (Although the "probably" qualifier in TechCrunch and in Yokum's post scares me a little.)

[yokumtaku]

Sachin - the point is that "convertible equity" can be characterized as qualified small business stock, with potentially a lower capital gain tax rate. It's not the start period on long term capital gains -- as LTCG would start when convertible debt is issued anyway.