HACKER Q&A
📣 badthingshappen

How should we handle 100k convertible notes while shutting down?


Dear HN community,

My cofounder and I launched a SaaS product 4 years ago. After a few months we already had customers (even a big one), so we decided to go all in and incorporate via Stripe Atlas and open an Inc.

Things were going great and we quickly closed a 100k$ round ("friends & friends" round) issuing convertible notes to our investors. We kept growing till COVID destroyed everything. Our customers have been hit hard and we lost 90% of our MRR.

We had to fire all our employees, but we kept the lights on thanks to the money in our bank account. We kept developing with the hope to acquire new customers and be successful after the black swan.

Well, the market was changed after 2yrs of COVID, and our SaaS was not as appealing as it was before. We did our best, we kept improving the product and partially pivoting, but we didn't acquire any new customer.

Our last mid-sized customer decided not to renew a few months ago, so we decided to shut down the company. Pivoting is not an option, we should rebuild the product from the ground up to really change the trajectory.

We invested ~4years (and our money), and we're super tired and half broken now. Raising money again is a desperate and impossible thing to do with our numbers. I'm sure the code base alone is worth something. We may try to sell it, but finding a buyer is super hard with 0$ MRR. We may spend months talking to potential buyers and burning our own money to refund almost nothing to our investors.

The convertible notes reached the maturity date 2y ago, but they were not converted into shares, nor were cash payments requested. We (the founders) know we already lost time and money, but we don't want to keep bleeding.

Since we have less than $1,000 in our bank account, what's the cheapest way to shutdown everything?

Thank you in advance, an exausted founder.


  👤 matt_s Accepted Answer ✓
It sounds like your friends collectively invested $100k and now whats left is 1% of that. Maybe spend the $1000 on a pity party - I'm being serious - throw a dinner party inviting your investors, explain what happened and that all that's left is the meal and celebrate what you learned along the way. Maybe to soften the news have an agreement drawn up that the code/product would be in "escrow" for you and your co-founder and if you spin it back up again/pivot they're still "in".

Curious what business sector your SaaS was in that it was impacted by the pandemic.


👤 hakanderyal
This is more of a question for lawyers/cpas. Since company is no longer solvent, it'll probably be some kind of bankruptcy. They would know the relevant laws and bankruptcy proceedings to choose a path for you.

Maybe try to find one from your network?