Part of it is because of the cost of capital. It's very high for startups and much lower for others, particularly busines customers, although the concept also a

Part of it is because of the cost of capital. It's very high for startups and much lower for others, particularly busines customers, although the concept also applies to consumers who buy things like magazines. Clever startups can capitalize on this difference in capital cost by discounting the price enough to incentivize the customer to take the prepay, but not so much that it's not worth the boost in liquidity. But yes, it means the customer takes the risk and doesn't get paid for it the same way a VC would, which in my book is a good thing for the startup.