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The author is contrasting "venture deals" against "borrowing capital" so I'm pretty sure they mean conventional loans with banks. EDIT: The author is totally t
by teej 10y ago
The author is contrasting "venture deals" against "borrowing capital" so I'm pretty sure they mean conventional loans with banks.
EDIT: The author is totally talking about venture debt and buried the lede. So yes, convertible notes as far as I can tell. Very misleading.
- mikeyouse 10y agoVenture debt is very different to convertible notes. Venture debt usually involves warrants and preferred shares, they'll take IP as collateral, and are only offered from a few banks and other financial institutions. They often have defined interest payments as well. We had a $X million dollar venture note from SVB at a previous company that needed to raise cash, it was helpful to keep the company afloat but definitely came with some pretty onerous terms (as to be expected). It was much different to the convertible notes that started the company. https://www.svb.com/Blogs/Derek_Ridgley/Extend_your_startup_s_runway__How_venture_debt_works/ https://www.svb.com/Blogs/Derek_Ridgley/Extend_your_startup_...
- teej 10y agoPart of the issue is that the author goes through no effort to actually explain WTF they are talking about, while making it sound like these startups are raising capital with no equity on the line.