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It's another option, but my personal feeling is to stay far, far away from anything called a loan.

• Readmore 20y ago
  People actually have a pretty good track record of building companies from loans. If you don't know how to make money from your idea then it sounds scary but if you actually have a way to get revenue then it's not. I would guess not having faith in your idea would keep someone away from taking a loan, but if that's the case why are you looking for any kind of funding?
  • Mistone 20y ago
    most business get started with loans. While there seems to be a high aversion to putting your own money in or borrowing money to get off the ground in tech and web firms, it pretty common in the small biz space as a whole. One advantage is that it is fast, and you remain in control.
• webwright 20y ago
  "The loan is a convertible note made to the entrepreneur's company. It is unsecured debt. If the company goes out of business, the entrepreneur is not personally liable in any way." This seems to indicate that it's a NOT a personal loan, FWIW.
• dean 20y ago
  If your company fails, you are not obliged to pay the money back, you can walk away. However, if you succeed to the point of getting your first round of funding, then you have to pay back the money with interest. But I'm glossing over an important point. They really don't want their money back--they want equity in your company. So they will convert the loan to equity, however, they want up to a 25% discount on that equity. From an example on their web site, if they lend you $100,000 and you end up getting Series A funding, then they can convert that $100,000 loan into $137,333.33 of equity in your company. Your company's valuation will ultimately determine just how much of your company you are giving up for this money.