At Startups.com we talk to thousands of founders, many of whom are weighing the benefits of convertible debt versus equity. If you’re not sure what convertible debt is, check out these posts:

• Convertible Debt Simplified

• Convertible Debt Basics

Since equity and convertible debt are the most common methods for raising early stage startup funding, it makes sense to examine them side by side so that you can understand the differences. Hopefully this will make your decision easier, so you can move on to the real fun of actually raising the money.

In order to get a handle on the decision we’re going to do three things:

1. Compare convertible debt and equity
2. Discuss how investors think about convertible debt
3. Evaluate the pitfalls of using conv...