This is one major reason why startups are not primarily funded by debt, and one reason why founders are often flabbergasted by how unwilling banks are to write loans.
-
-
Show this threadThanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
Interestingly, as debt gets lower in quality it behaves more like equity—historically, sufficiently junky junk bonds actually correlate inversely with highly-rated debt, because interest rates correlate with GDP growth. A few investors figured this out in the 70s and did well.
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
The asymmetric return of equity (infinite upside) versus debt (limited upside) must also play a role
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
Is this due to the investors, or the nature of the instrument? Debt that's not discounted has no upside to accrue the value of an optimistic outlook.
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
Has convertible debt worked at all in this space - at least gives “secured” benefits of debt with equity upside? Expensive for startup (?) but compelling for investor
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.