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If they're really having 100MM recurring revenue, couldn't they just borrow money from the bank without losing equity?
by xchaotic 8y ago
If they're really having 100MM recurring revenue, couldn't they just borrow money from the bank without losing equity?
- pauldix 8y agoArticle says that it's for potential acquisitions. I'm not a banker, but I assume they don't make loans for those kinds of operations. Also, they charge interest. Ultimately, it's a question of what the most effective (cheapest) way to add capital to the balance sheet is. They almost certainly could have raised venture debt (they probably already have an agreement in place), but this was probably deemed a more cost effective way to add capital.
- bradleyjg 8y ago> I'm not a banker, but I assume they don't make loans for those kinds of operations. Generally not banks per se, but bondholders definitely do. That’s PE’s entire business model.
- indigodaddy 8y agoMaybe they can buy Atlassian now.
- daniel_iversen 8y agoExcept Atlassians market cap is $20 billion :-)
- rbranson 8y agoA company that is net losing money can't get a loan for 90% of their forward revenue.
- moritzplassnig 8y agoThey likely are doing both, raising $ for % and debt additionally. It's not either or, just that debt rounds usually don't get reported/announced. They often happen hand in hand with investment rounds.
- gorkemyurt 8y agoBanks don't like to lend money to company with no tangible assets.