[kguttag]

Using patents to secure loans is not new. Most Famously Tesla did it.

What makes it "news" is that Magic Leap was able to raise $2.6 Billion without having to resort to using the I.P. as collateral. It usually does not make the previous investors happy and you usually resort to this when you can't raise money any other way. It is also a one-trick-pony in that you can't do it again and future potential investors know that the I.P. is already gone if the company goes bust.

They just announced a $280M investment from NTT Docomo, but base on my and other people's estimates, Magic Leap was running out of money while burning through about $600M/year so that only bought them about 5 months of runway.

[riffraff]

How is magic leap burning through so much cash? It can't be all salaries and at the same time they don't seem to be selling a ton of devices at a loss.

Are they building factories or something?

[DonHopkins]

Nepotism. The people running the company hired all of their friends and family into kooshy do-nothing positions.

[rawoke083600]

I've seen this ! My fav-no-useful positions I've seen filled was a "Business-Analysis" and "UX-Expert(basically a graphics artist)". The B.A spend his days drawing the most useless and not even pretty diagrams of how the "new business" which never arrived was going to work and integrate with our current systems(which he had no clue how they worked or what their limitations were). Lol those graphs and diagrams had more fantasy in them than all of the LOTR combined. Once we got to retrenchments he was the first to go and the loudest to protest of the unfairness !

[dcposch]

Sounds like WeWork...

1600 employees. Billions raised. Big hype, but what actually shipped is similar to a three-year-old Hololens.

Do you have any specifics? Who were the friends-and-family hires at Magic Leap?

[aedron]

"Magic Leap is estimated to have over 1,800 employees and 19 office sites."

[yo-scot-99]

how would a bank evaluate the risk -- do they generally have an internal team or farm it out to a consultancy? they don't have the history or contacts like VC or google's invesment funds. meanwhile, they are playing footsie with saudia arabia again: https://www.youtube.com/watch?v=iDv2E22Mz0s&feature=youtu.be...

[pottertheotter]

The big banks like this have their hands in everything and connections all over the place. They have their own VC funds, they have investment bankers who specialize in different areas of tech, and they often have their own tech bus dev people in Silicon Valley who are deeply networked with both company founders and VC firms. For a lot of startups, being able to put the JP Morgan/Chase logo on your website as a customer is huge. The founders and VCs know this.

[baybal2]

> The big banks like this have their hands in everything and connections all over the place. They have their own VC funds, they have investment bankers who specialize in different areas of tech, and they often have their own tech bus dev people in Silicon Valley who are deeply networked with both company founders and VC firms. For a lot of startups, being able to put the JP Morgan/Chase logo on your website as a customer is huge. The founders and VCs know this.

And it was those very people that were selling their round A. Very competent people they were... :)