Conversation

I recently learned this pattern is common now: Step 1: Invest in a startup at 100m Step 2: a couple of up rounds later you’re at unicorn level, so 10x yay Step 3: Use private stock appreciation as collateral for debt 👀 Step 4: Market crash, survival down round, margin call!
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My question is: Who exactly is lending against equity in privately held startup stock?? And why? It’s not unencumbered collateral…
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Replying to
And what do you actually do if margin called if the stock isn’t liquid yet even on secondary market? 🧐 Sell other assets to cover?
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