[teej]

There’s tons of existing finance infrastructure for this already, it just doesn’t reach tech. Small business loans, traditional banks, franchisors, local business investor groups, etc all facilitate these sorts of businesses today.

They just don’t do tech. This is because their risk models are built on 30+ years of priors and the financing is very often business sector specific. Tech is too much of an unknown for this model.

[grumple]

Are you saying banks won't provide loans to small tech businesses, but they will to things like restaurants?

[molsongolden]

Differentiating between "small tech businesses" and VC-style startup tech might be useful here.

There are many tech businesses that can and do qualify for traditional financing/funding. The difference is that banks aren't interested in funding high-risk moonshots.

Simplified examples:

Tech Biz #1: Founder identified a niche, has a few customers, and has been working on making the consultant -> product jump. They're paying the bills but see an opportunity to offer their product to many more customers and would like to work on the business instead of working in the business. They want to hire a programmer and invest in marketing but need to borrow money to make it happen.

Tech Biz #2: Founder wants to build X for Y and change the way people do Z. It's going to take many programmer-months to build the product and a sales and marketing team to change consumer behavior. There's no guarantee that they'll find product-market fit but, if they do, the business has the opportunity to scale rapidly with strong margins.

[bsder]

For a running restaurant, sure.

The issue is that the banks will pretty much provide loans for anything with consistent cashflow. This includes tech companies.

The problem is getting investment when you have no cashflow.

[airstrike]

Getting a loan when you have no cash flow to service it doesn't usually work well