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This is also something you see with some other corporate products for startups, for example, Brex explicitly says "Credit limits are based on the cash you've ra
by philipkiely 7y ago
This is also something you see with some other corporate products for startups, for example, Brex explicitly says "Credit limits are based on the cash you've raised and/or equity in your company" [0] while Stripe instead asks about revenue [1] (I assume because they're in a unique position to verify it). I guess different b2b companies are looking to serve different kinds of businesses (shocking conclusion, I know).
All of that said I definitely agree, as an outsider, it seems like a bootstrapped business would have a lower risk profile, but a venture-backed business would have faster growth potential and thus be worth more in premiums, so maybe that's their reasoning?
[0] https://brex.com/startups/ https://brex.com/startups/
[1] https://stripe.com/corporate-card https://stripe.com/corporate-card
- unlinked_dll 7y agoI'm not sure that bootstrapped businesses have a lower risk profile, at least depending on what the other business views as risk. VC backed companies have a route to capital and lines of credit if they tank. What is Brex/Vouch going to do if your bootstrapped business tanks? Take your house?
- philipkiely 7y agoThat's a good point, and bootstrapped businesses (in the US at least) are generally incorporated in a manner that protects personal assets, so the provider would not even be able to go after the owner's house in most cases.
- TaylorGood 7y agoIf I recall, Brex says their minimum is $10K/rev per month