Vircon Legal Advised PulpoAR on its Convertible Note Round Joined by Egiad Melekleri and StartersHub Ventures

Vircon Legal advised PulpoAR on its convertible note financing round. The transaction closed on 30 May 2021 with participation from Egiad Melekleri and StartersHub Ventures. The financial terms of the round were not disclosed at the request of the parties. The round followed the convertible note transaction that closed in September 2020 — see our note on the prior round.

Successive convertible note rounds with new investor participants sit in a structurally interesting category. They extend the company’s runway with additional convertible capital between priced rounds, but they require careful drafting around the cap-table evolution, the relative seniority of the new and the prior convertible note holders, and the conversion mechanics that will eventually trigger across multiple convertible cohorts at the next priced equity round. Getting these multi-cohort dynamics aligned at closing is what allows the instrument to perform consistently when the priced round eventually triggers conversion across all outstanding notes.

Vircon Legal advised on transaction structuring, convertible note documentation with valuation cap and discount mechanics calibrated to the company’s expected trajectory, maturity and interest provisions aligned with the prior convertible cohort, governance design across the multiple convertible holders, founder commitments, and the corporate housekeeping required to support the eventual multi-cohort conversion event. Multi-cohort convertible note structures particularly benefit from clean documentation — the architecture has to support a clean, predictable conversion event across multiple holder groups with potentially different cap and discount expectations.

PulpoAR completed a further convertible note round in October 2021 with Alim Küçükpehlivan, and subsequently a priced seed round backed by Akkök Group and angels — see our note on the priced seed round. PulpoAR was eventually acquired by The Glimpse Group in December 2022.

For more on our early-stage and convertible-note practice, see our Startup Law and Sell-Side Representation pages.