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You're forgetting money that they can leverage from banks with the money they raised.
by imjk 13y ago
You're forgetting money that they can leverage from banks with the money they raised.
- HockeyPlayer 13y agoI've never heard of a VC leveraging up with borrowed money. Who would be on the hook if the fund loses money?
- ganeumann 13y agoVCs' portfolio companies often raise debt. This is called venture debt and the lenders are banks like Silicon Valley Bank. VCs tend to have a love/hate relationship with venture debt. On the one hand, it means they suffer less dilution as the company grows; on the other hand, it means their investment gets riskier just at the point where they are finally de-risking the company.