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Is there an unfulfilled opportunity in creating bond-type instruments for investment in startups/businesses that may never get acquired or to the public market?
by DaniFong 16y ago
Is there an unfulfilled opportunity in creating bond-type instruments for investment in startups/businesses that may never get acquired or to the public market? Many founders don't want to exit, or don't intend to (37Signals would be a marquee example), but it is getting easier and easier to make some significant amount of revenue from smaller and smaller niches. It is just less likely, in those small niches, to create a big company, and there are a limited number of acquirers who can acquire successfully.
- rmah 16y agoPerhaps. But the level of risk is so high that the bond would have to pay a very high coupon. But by perhaps bundling startups together the way they do for mortgages it could lower the risk level. We could have SBS's or Startup Backed Securities. Har.
- DaniFong 16y agoThis is not a bad idea. It might be a great one. Do you know anything about the logistics of getting something like this legally worked out? Presumably, there are some businesses who'd be okay with that very high coupon -- as the business model improves itself it could come down. It's a lot less risky that credit card and other personal debt, but it handles a niche that equity investments mostly can't touch. That's possibly trillions of dollars in an underserved market.