"Why dont tech companies use this method and why do they need VC funding instead" Banks do not have as much vested interest in a startup as VCs. So their risk

"Why dont tech companies use this method and why do they need VC funding instead" Banks do not have as much vested interest in a startup as VCs. So their risk appetite is much lower than VCs. VCs lend money based on future potential of making it big and they take a lot more risk than a usual lender/bank. Thats just the money part. VCs always provide a network of connections and key contact (mostly) who can also help your startup. Good VCs will provide mentorship and valuable help.