Anatomy of a Financing: The Benefits of Convertible Debt  A CEO
explains how using convertible debentures was a good deal for
his company and his investors.   Anatomy of a Financing: The
Benefits of Convertible Debt    Back in 1987, when Michael Troy
founded his Petaluma, Calif., software company, KnowledgePoint,
he figured he'd need about $250,000 in start-up capital. "We
didn't pay salaries for about a year, and that saved us $80,000.
I contributed $24,000, borrowed $20,000 from credit cards, and
took out a $50,000 home-equity loan." Still, Troy knew he had to
raise an additional $80,000, from family members, friends, and
business associates.  "When I structured my investment proposal,
I addressed the issue of an exit strategy," he recalls. "A lot
of entrepreneurs don't think about that during the start-up
phase, but I was convinced that we needed to plan for the back
end of the investment up front."  From that perspective, Troy
concluded that convertible debentures made the best sense for
KnowledgePoint an