In software at least, a bunch of startups have been able to extend their runway because of debt. For saas, lenders have given a bunch of these guys loans though that money is starting to run out.
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Looking at it in practice, at exit it seems the lenders always get their money back. Remember, debt gets paid before equity etc.
Yeah, but...there's no liquidatable assets when these SAAS cos blow. Charlie Munger had some comments about how much he loves government software companies at the recent DJCO meeting. I haven't gotten to them yet, but you may also be interested.
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Is Dura's thesis basically boomer software cos where the owner is retiring?
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That’s part of it but there are tons of scenarios where people want out of a small software company like boredom, opportunity cost, health, etc.
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IMHO: It’s hard to go bankrupt when you have >90% gross margins, predictable recurring revenue and customers whose business wholly depends on you.
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Agree with that for sure, the trouble is these lenders aren't just lending to the companies you were smart enough to buy! They're lending to the whole bell curve of SAAS cos.
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