This is clever. Paying back 500k in a couple of years is no big deal if the business reaches any kind of profitability, and the odds of getting there are much h

This is clever. Paying back 500k in a couple of years is no big deal if the business reaches any kind of profitability, and the odds of getting there are much higher when you start with 100k in the bank. Bootstrapping from 0 is disproportionately difficult, so I can see how this is a great deal for some people. The incentives are aligned too. With a deal like this it's good for the founders and for the investors if the startup gets to profitability quickly, but there's no perverse pressure to shoot for a 100x return or die trying like you get with conventional VC funding. Of course, if the startup takes off in a major way then VC funding is still on the table. Otherwise the founders will own 100% of a profitable lifestyle company. Win-win.