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With regards to your second question, I think the preference to selling a minority stake over taking out a loan is that the loan is debt, the minority stake is

by dhagz 7y ago

With regards to your second question, I think the preference to selling a minority stake over taking out a loan is that the loan is debt, the minority stake is not. A lot of what DHH is arguing for here was only possible for 37Signals/Basecamp because of how they structured and ran their business. He basically bought a seat as a (non-controlling) member of their LLC, and that was really it. So he bought a share of their profits. And Bezos had the option to sell the stake back after 7 years.

mdorazio 7y ago
Right, which is exactly why I put the cake comment - small business owners want the benefits of VC capital (no debt repayment or interest) without the downside (up-or-out constant growth pressure). For the investor, it just doesn't make much sense. Thanks for clarifying how the 37S deal worked, though. Having a structure like a 7 year buyback clause goes a long way toward mitigating my first point.