Conversion Events

What’s a conversion event?

A conversion event refers to the conversion of debt raised in a previous investment agreement into shares of the issuing company. Conversion events occur under certain conditions and can either happen very quickly or several months after the investment agreement was signed.

Odin does not charge for conversion events, but please note that you may incur external costs if you originally raised a Founder SPV via a debt instrument, which then converts into shares.

• If your company is registered in a country where notarisation of legals is required, like Spain or Germany, Odin’s standard notarisation fee would apply again, even if it had already been paid once before upon the original closing of the deal.
• Upon a conversion event, your company is legally required to collect the nominal cost of its shares in order for these to be registered. Given the number of shares will only be determined at the time of conversion based on the Conversion Price, this amount can't be forecast exactly until that point. This is not an Odin fee, rather part of the mechanics of how you have invested. It may be worth discussing with your investors in case they are willing to cover this cost at the time of conversion.

Informing Odin of the conversion event

Please contact Odin’s Customer Support team at hello@joinodin.com if a deal you completed is converting. As outlined in the next section, your company will have to contact our Legal team to sign the conversion documents.

Signing conversion docs

As with any other Post-Close Legals, conversion legals must be signed for by Odin on behalf of Odin Investments Limited.

You will have to circulate the relevant documents to Odin for signature via Docusign, to our Legal team’s email address (legal@joinodin.com). The below signature block would still apply.

• Signatory: leave blank for Odin to complete
• On behalf of: Odin Investments Limited
• Address: Unit 105, 65-69 Shelton Street, London, WC2H 9HE
• Email: legal@joinodin.com

For conversion legals, Odin would only sign after seeking your approval as the investee company contact. Odin will share the docs with you to review if you didn’t already have access.

Does conversion differ depending on the original agreement?

Practically-speaking, the above process does not differ greatly depending on the original investment type. In all cases, the conversion process involves the issuance of new shares to the investors in the SPV, based on the agreed-upon terms of the investment instrument and the valuation of the company at the time of conversion. It's highly important for both your company and Odin to carefully review and understand the terms of the investment instrument, including the conversion mechanics and any associated rights or obligations.

Below, we’ve outlined the core differences between how each investment type converts into equity. Again, this has no real bearing on Odin’s process, but serves as a reference point for how each of these agreements function from a conversion standpoint.

Advance Subscription Agreement (ASA)

In an ASA, investors agree to subscribe for shares in your company at a future date, typically upon the occurrence of a specified trigger event, such as a future equity financing round.

When the trigger event occurs, the investor's subscription amount is converted into shares at the predetermined price or discount specified in the ASA.

Your company then issues new shares to the investor based on the agreed-upon terms of the ASA.

Convertible Loan Agreement/Note (CLA/CLN)

In a CLA or CLN, investors provide a loan to your company, which can convert into shares at a later date, typically upon the occurrence of a specified trigger event, such as a future equity financing round.

When the trigger event occurs, the outstanding loan amount, including any accrued interest, is converted into shares at the predetermined conversion price or discount specified in the CLA or CLN.

Your company issues new shares to the investor based on the agreed-upon conversion terms, effectively converting the debt into equity.

Simple Agreement for Future Equity (SAFE)

Unlike traditional debt instruments, a SAFE is not a loan and does not accrue interest. Instead, it represents a promise of future equity in your company.

When a specified trigger event occurs, such as a future equity financing round, the SAFE converts into shares of your company at a predetermined valuation cap or discount rate, as specified in the SAFE agreement.

Your company issues new shares to the investor based on the agreed-upon terms of the SAFE.

Seed Funding Agreement with Share Transfer (SeedFAST)

A SeedFAST is a type of funding agreement that combines elements of a share purchase agreement and a convertible loan agreement.

In a SeedFAST, investors purchase shares in your company at a discounted price, with the option to convert their investment into a loan if certain trigger events occur, such as your company failing to achieve specified milestones.

If the conversion option is exercised, the investor's shares are transferred back to your company in exchange for a loan instrument, typically with specified terms for repayment and interest.

Conversely, if the trigger events specified in the SeedFAST do not occur, the investor retains their shares in your company without conversion into a loan.

How is this reflected in Odin?

Once conversion legals have been completed, Odin will include those docs in the same folder that your investors can access to see the original set of legals the deal was closed under.

Odin will not update the deal to an equity deal and edit the details to include new relevant information, like the share price. This is because we have to ensure the deal reflects the original terms the SPV invested under for posterity. Your investors will be able to infer all relevant information, as well as understand their new shareholding, from the conversion legals.