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Does any one knows if VCs have contracts with startups where they have to deposit X amount weekly or monthly? Now if they can't because of the SVB debacle, can
by 6d6b73 4y ago
Does any one knows if VCs have contracts with startups where they have to deposit X amount weekly or monthly? Now if they can't because of the SVB debacle, can the startups sue them? This would put these VCs in even worse situation - not only they could be out of their money deposited at the bank but now they owe even more money to the startups.
- egl2021 4y agoThe VCs don't "owe" money to the startups: they "buy" equity with their money. The VCs aren't "out" the money deposited by the startup at SVB; that money was already exchanged for equity in the startup. The VCs aren't happy because they and the startup both expected that the money-equity exchange meant that the startup would have working capital, so potentially the value of the equity that they got has fallen. This is a problem for both parties.
- 6d6b73 4y agoYes they buy equity but do they always pay upfront? I would imagine that they have some contracts structured in a way that allows them to pay in rates based on performance etc. Also, what if some vc signed contract last week with payment due this week and they can't pay. I dont expect a lot of cases like that but i suspect few did.