[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