Can you issue convertible notes without having a company?
I am about to secure a first minor investment (friends willing to invest 20k). I currently don't have a company but am registered as a solo practitioner/economic activity.
I was thinking about exchanging the investment for convertible notes. Is it something that I can do even if I don't have a company with shares yet?
without a company, the loan is taken against you personally. so if something happens, it will be your assets that they can go after. so, could be your house etc...
a company is a separate entity. so if anything goes wrong, it will take against the assets of the company.
I see. This is quite frightening. But what I understand is that "Anything going wrong" would mean the company not being created, right?
Cause once the company is created and the shares are given, I won't owe anything to the investors and therefore won't be liable to anything. Or am I missing something?
in this case, you will have to redo a whole exercise of giving shares to your creditors(if they accept).
a convertible note is more useful for investors, when there is something tangible it is held against(like shares or an asset).
in this case, you might want to consider giving them the timeline as to when they can exercise their option on the convertible note(as to when they can choose to make it shares or keep it as a loan). that would give you more control, especially in the early stages.
to capitalize on @gskalra i think at this point you may want to legally shield yourself from any financial liability and register an entity. Even with F&F funding you can potentially run into some issues that you're better off protecting yourself from should something happen.
take a look at https://www.ycombinator.com/documents/ - Use safe easier than a convertible note. less paperwork and regulatory fillings if you truly want to do this correctly.
中文？
No, sorry :D