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Like personal owner debt? I.e. mortage up the house for 300k and fuel some growth? Let's compare VC to Debt for owner capital Funded via VC: * Startup Wins B
by brianwawok 8y ago
Like personal owner debt? I.e. mortage up the house for 300k and fuel some growth?
Let's compare VC to Debt for owner capital
Funded via VC:
* Startup Wins Big: You get 30-70% of big money
* Startup Fails: Walk away with a fresh slate
Funded via personal Debt:
* Startup Wins Big: Get 100% of the big money
* Startup Fails: Declare personal bankruptcy, perhaps lose house, perhaps unable to buy a home for 5 or so years, lose any physical assets
I am a big fan of don't get VC if you don't need VC. But for many many normal founders without a huge pile of cash in a trust fund or from a previous exist, the VC debt looks a whole lot nicer than the person debt story.
- crsv 8y agoThese Win / Fail outcomes are not nearly this binary in reality, so I don't think this is a very helpful comparison. There's a wide distribution of "Winning" and "Failing", and while these extremes do exist, they're actually both outliers (most businesses don't win "big money", also most founders don't lose their house when they fail).
- mi100hael 8y agoNo, that would be insane. That's what LLCs are for. Small business loans and private lenders exist and are usually accessible if you have profits and/or business assets.
- _e 8y agoMost lenders require a personal guarantee even if it is a business loan.
- brianwawok 8y agoYou aren’t getting non personal guaranteed loans as a tiny startup with no assets
- deleted 8y ago[deleted]