Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face. If I were running a startup, I don't think I'd ever take it.
-
What?! I know there is an inherent bias coming from one of the largest early stage VC firms. I think there is a place and a time absolutely. I guess you could say growth at all costs, and I could say avoid dilution at all costs.
Why would I be biased? Venture debt doesn't compete with seed funding.
-
-
Because you’d rather follow on investments dilute yours than destroy them. I’d argue that vc’s desire for multiple founders is a similar calculation. Debt, unlike equity, can cause catastrophe, but to say there’s no place for it in startups is a head scratcher.
-
Suppose I’m selling a new consumer product for my startup (yes, I know that these are some of the shittiest startups). I get a PO from Walmart. You’d do an equity raise to buy purchase inventory there?
End of conversation
New conversation -
-
-
I don't disagree that venture debt would not normally compete at seed stage. I would argue that generally VCs are playing a power series game (secrets of sand hill road) and venture debt could play out in a smaller VC outcome, but potentially higher returns for founder(s).
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.