[tedivm]

There isn't any debt to service. Taking funding isn't the same as taking debt (in some ways its worse, in some better), and there's no direct interest or payment they have to make every month like if it was debt.

The problem is that they give up ownership (and probably ownership) to people who may have different goals and values. This can lead to enshittification, especially for a company that doesn't have a good path to extreme growth and profits. You also can't discharge ownership in bankruptcy like you can with debt.

[Ekaros]

It is not debt, but on other hand anyone investing this pay probably have expectation of return that is higher than a loan would be. And that money must come from somewhere at somepoint...

[yard2010]

Isn't "raising funds" just a euphemism for taking a loan you don't have to return in cash? Like a loan which is not regulated as a loan

[bombcar]

It's not a loan because it doesn't have to be paid back.

But it operates somewhat worse than a loan because the buyer now has some say in how the company is run, and they will want to see a return on their investment eventually.

A loan may be better because as long as the company can service it, the lenders have no say in how the business is run, and they get no additional profit from increased income/profit of the business.

[marcosdumay]

Except that if you sell or liquidate the company, you have to pay it all back before you can get any of the money.

So... It's completely equivalent to a low preference loan.

[gbear605]

Technically a VC with less than 50% control can’t do anything to you, so as long as you keep 51% and never sell or liquidate then it’s free money. In practice, they wind up pressuring you to do those things and then they get their money back.

[yard2010]

That's my point, when taking a loan you know upfront the cost, but when raising money you can't know what it really takes

[Invictus0]

Aren't apples just a euphemism for oranges?

[yard2010]

Are they now