Re:Who Pays the Price for Selling $10 Bills for $5?
by dredmorbius on Saturday April 06, 2019 @05:32AM
(#19590012)
Though VC is technicaly equity rather than debt.
Rather than borrowing, it induces a follow-on investment, capital, revenue and market (in cases), recruiting strength and other mindshare effects.
The smart money knows the exit strategy (and more importantly: timing ), the dumb money thinks it does, the hopeless money has no idea what exit strategy is.
The effect is similar to the debt model you describe, though structured differently.
Rather than borrowing, it induces a follow-on investment, capital, revenue and market (in cases), recruiting strength and other mindshare effects.
The smart money knows the exit strategy (and more importantly: timing ), the dumb money thinks it does, the hopeless money has no idea what exit strategy is.
The effect is similar to the debt model you describe, though structured differently.