Debt is Coming
Fascinating post by Alex Danco. It’s worth a read, and not just because Proven Ventures is in lock-step with his thesis. I can’t get this sentence out of my mind…
Have you ever considered: because equity is how we finance startups, therefore most startups fail?
Investment should be about alignment, and having taken significant amounts of venture capital in the past, it’s been my experience that what’s best for venture capitalists isn’t always best for founding teams. During negotiations, venture capitalists attempt to acquire as much as they can for as little as possible. And then the only way they return capital to *their* investors is through a liquidity event - either a sale/acquisition or a listing on a public exchange.
The likelihood of either of those scenarios is rare.
Shouldn’t the goal of investing be to generate as much leverage as possible for the new startup companies, in the form of customers and *gasp* revenue? Historically, venture capital investments were more concerned with growth, and less on what I would call the old-fashioned essentials.
All this to say I am thrilled to offer revenue-based financing as the vehicle by which we invest and return money to our investors. True alignment!
Alex Danco - Debt is Coming. Full article here…
