I really do not understand why anyone would would want to lend a startup money these rates (14%). it may sound like a high percentage but...
- nobody is ultimately responsible for the debt. if the company runs out of cash, money gone. you cannot go after the people who squandered your cash. 90% of startups fails early. it's like a slot machine but when you win, you get 14%.
- a recent strategy for companies is bankruptcy followed by a 'restart'. get rid of any debt and a lot of employees, keep the rest.
- take the money and run. the current system would enable unscrupulous ceo's to direct the money to themselves and let the company crash. a lender would lose his money.
lending to companies is broken. if you have ever seen a loan fail to repay itself, you will not make that mistake again. to enable lenders to have a reasonable guarantee they will see their money back, the system should be adjusted so that shareholders can be easily held (personally) responsible for the companies debt.
conclusion: debt is an amazing way to finance a startup, if you can get it. the last thing seems very doubtful. a lot of these startup lenders are likely to lose money.
- nobody is ultimately responsible for the debt. if the company runs out of cash, money gone. you cannot go after the people who squandered your cash. 90% of startups fails early. it's like a slot machine but when you win, you get 14%.
- a recent strategy for companies is bankruptcy followed by a 'restart'. get rid of any debt and a lot of employees, keep the rest.
- take the money and run. the current system would enable unscrupulous ceo's to direct the money to themselves and let the company crash. a lender would lose his money.
lending to companies is broken. if you have ever seen a loan fail to repay itself, you will not make that mistake again. to enable lenders to have a reasonable guarantee they will see their money back, the system should be adjusted so that shareholders can be easily held (personally) responsible for the companies debt.
conclusion: debt is an amazing way to finance a startup, if you can get it. the last thing seems very doubtful. a lot of these startup lenders are likely to lose money.