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The document discusses convertible debt, which is debt issued by a startup to an investor that converts to equity under certain conditions. Convertible debt is commonly used in startup investing as it allows the investor to ultimately own equity while simplifying and speeding up negotiations. However, convertible debt without a price cap can be risky for investors if the startup raises money at a high valuation. Price caps were introduced to address this, setting a maximum price the debt can convert at, but founders sometimes resist them. In summary, convertible debt can be a good option but alternatives like simplified preferred stock terms also exist.Read less