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Purchasing equity is the moral approach. This means that the investor also bears the risk. If the company succeeds, the investor makes money, if it doesn't, the
by gher-shyu3i 6y ago
Purchasing equity is the moral approach. This means that the investor also bears the risk. If the company succeeds, the investor makes money, if it doesn't, then he lost money.
> but it's a little odd to see this comment on a forum hosted...
Why? They're not lending money, they're investing, two very different things.
- ahepp 6y agoCreditors certainly bear risk of default. In fact, isn't that why VC exists? If banks were insulated from the consequences of their lending, wouldn't you expect them to loan to risky startups?
- vineyardmike 6y ago> isn't that why VC exists Not entirely. VC exists for things where debt doesn't work. You can use debt to fund some things, eg. real estate, because a failed business still has a valuable asset to sell. If a vc funded tech company goes under, the only thing to sell is source code, which is not nearly as fungible.
- ahepp 6y agoI'd argue that's a consequence of creditors bearing the risk of default. The risk is high both because the business may go under, and because the business has few assets that can be liquidated.
- gher-shyu3i 6y agoWith an interest bearing loan, the bank will come after the borrower's assets, seeking not just the principal, but the interest on top, until they milk them dry. This is just one reason why lending money with interest is immoral. Read up about Islam's position on this issue if you want to learn more. It's quite eye opening, and sad that we have to live in a world that is based on fundamentally evil and corrupt financial practices.
- selimthegrim 6y agoI see you are representing all of Islamic jurisprudence here but somehow condemning things like sukuk?
- ahepp 6y agoAre they condemning sukuk? I thought sukuk was an attempt to reconcile the desirable qualities of a loan with Islamic jurisprudence surrounding finance? So unless the commenter thought sukuk was illegitimate (I haven't seen them state this, maybe they have), wouldn't it be reasonable assume they consider sukuk acceptable? Perhaps obviously, I'm only vaguely aware of Islamic finance, so I may be missing something basic. *EDIT*: I've just seen the comments where they appear to be condemning sukuk, or at least common implementations. But it seems like their point is that they think it's simply slapping a different label on lending, which I'm inclined to agree with (especially if there are repurchase agreements and guaranteed returns).
- gher-shyu3i 6y agoA lot, if not most, of present day "Islamic finance" isn't compatible with Islam. They're simple relabeling of Western practices with Arabic terms, but underneath they're more or less the same. There are many Hadiths and narrations prohibiting and condemning these actions.
- selimthegrim 6y agoSo ghazwa is a preferable alternative for economic growth. Gotcha. Let me know how taking potshots at NATO in Syria goes. How are you any better than Western colonialists then?
- gher-shyu3i 6y agoPlease look up straw man fallacy: https://en.wikipedia.org/wiki/Straw_man https://en.wikipedia.org/wiki/Straw_man It's well known that many Arab governments today have been installed by the Western colonialists. It's established history. We're still living the effects of post WWII colonization and Sykes-Picot. Of course, there is blame on us too, but to deny external influence is also ignorant.
- vineyardmike 6y agoYes exactly, its exactly the reasons you said, high risk and few assets. > creditors bearing the risk of default. The person giving away the money is always bearing the risk, that doesn't go away. VC will bear the risk still.