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A comment on Silicon Valley’s ‘unicorns’ have regulators worried. Parent comment
Most of those deals are really a debt disguised as an equity.
It just a way to give companies loans, which should be repaid via either cashflow or future IPO.
When reading news headline just replace: "Uber raised another $1B round" with "Uber took another $1B loan".
One of the unicorn CEOs said:
We need to be worth a billion dollars to be able to recruit new engineers. So we decided that was our valuation.
If you are issuing options to employees based on valuations fabricated to attract them, you are pretty clearly committing securities fraud.
http://blogs.wsj.com/moneybeat/2016/04/01/sec-chief-warns-si...
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Most of those deals are really a debt disguised as an equity.
It just a way to give companies loans, which should be repaid via either cashflow or future IPO.
When reading news headline just replace: "Uber raised another $1B round" with "Uber took another $1B loan".
One of the unicorn CEOs said:
We need to be worth a billion dollars to be able to recruit new engineers. So we decided that was our valuation.
If you are issuing options to employees based on valuations fabricated to attract them, you are pretty clearly committing securities fraud.
http://blogs.wsj.com/moneybeat/2016/04/01/sec-chief-warns-si...