I don't understand. My company recently raised using convertible notes with a cap right around where an appropriate valuation might have been. Now my investors are all interested in seeing the company valuation at the next funding round be a multiple on the cap. Where are the misaligned interests?

Additionally, it seems as though high caps are a separate argument from the "conv. with cap vs. priced round" argument. With either, the market decides what an appropriate valuation, cap, or terms (no cap) a company is able to raise at. Therefore, it is simply the mechanics of the market that lead to no cap notes and sky-high caps, not the fact that the deals are done with convertible notes.

Not trying to be argumentative; I'm really interested in learning why you've taken a strong stance on this.