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A VC is your business partner. If you fail, they fail as well right along with you to the tune of their money. A bank is not your business partner. If you fail
by flexxaeon 14y ago
A VC is your business partner. If you fail, they fail as well right along with you to the tune of their money.
A bank is not your business partner. If you fail via a bank loan, the bank still wants their money AND interest.
- csense 14y ago> If you fail via a bank loan, the bank still wants their money AND interest. If your business goes bankrupt, the bank only gets their money if they required you to personally cosign for the loan. Of course, if your business isn't profitable yet, it's likely that they'll make you do exactly that, as a condition of getting the loan in the first place -- especially for tech companies that don't have many assets that can be liquidated in case of failure.
- flexxaeon 14y agoTrue but bankruptcy would be the step after failure. They want their money but doesn't mean they will get it back.
- S4M 14y agoFor a tech company, common sense would require to make the founders liable to the debt, otherwise they can pay themselves a good salary -with the money borrowed to the bank - and then bankrupt the company. For this reason - as well as other reason people here already mentionned - the banks won't lend so much money to a young tech company.