A fundamental insight about finance: Suppose the bank has $250k and you want to buy a house costing that. The bank, by convincing you to take out a mortgage, ends the day *materially* better off than it started, because your promise to repay is worth *a lot* more than $250k.
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I know of some small SaaS co’s that securitized their incoming cash flows. Sold to some hedge funds. Cottage. It has begun, in a few fits and starts. A startup that does this for other startups, with, eg YC as an investor and distribution angle? say.... Stripe?
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Interesting, how do they align incentives to keep retention rates high?
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Equity market is already valuing those cash flows quite aggressively. Unlikely they're worth more to anyone else rn. The only thing you could add via secularization is leverage.
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Probably need to think about how to really argue the future security of those cashflows, too - not that you need collateral (cell phone companies securitize lease payments nowadays, and that's a pretty 'easy' thing for someone to stop paying, they just choose not to)...
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... but need to be able to really make the case to debt investors that these cashflows are very predictable and are not going anywhere with any level of uncertainty
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One important difference is that mortgages are collateralized by assets whose value does not depend on the continued operation of the originating bank. Harder to disentangle in SaaS. Becomes more like a senior loan.
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This is very interesting conceptually, but I think that the key difference is that the mortgages are credit secured by a real asset. Of course there is also a 15 or 30 year "contract" for a mortgage whereas I can cancel my DropBox, upgrade, or downgrade at almost anytime.
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Debt is another common way to sell a legal claim to your future cash flows, so I think this kind of security would have to be more lucrative than both the credit and equity markets from the perspective of the SaaS company.
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