One of the first questions that comes up in Angel Funding is “how much am I getting” and “how much am I giving away”. Angel funding is often achieved with a convertible note, which makes answering the second question much easier. Whatever the amount you get, a convertible note will have an option to convert to equity on a future funding, at a discount. So for example, if you get $100,000 on a convertible note that offers a 10% discount – and the later round is for $1MM, then after conversion your investor would own 11% based on the discount. This means that you don’t have to set a value until the later investment when you have more to base that value on. There will often be a lower bound on the conversion – so that more angel financing would not trigger the conversion and could be brought in under additional convertible notes. There is sometimes also an upper bound to insure that the investment is not diluted if the first round is much bigger and farther away. Discounts tend to range from 10% to 20%. If an investor brings more to the table in terms of contribution to the company, they may also want a direct equity grant. Som convertible notes carry a preference (1.5x to 2x) insuring that multiple on the investment is the first paid out on a liquidity event.