Thursday, October 20, 2005

Banks Focused On Startups Upset That Others Are Crowding The Loan Business: "Historically, it's been quite difficult for a startup to get a loan, because the basis of most loans is your ability to pay the money back—and startups usually don't have enough of a track record to make lenders feel comfortable. So, for the banks that do offer loans to startups, it's often quite risky, and the rates can reflect that. However, with a new bubble forming, and with 'hedge funds' (which often aren't 'hedge' funds at all) forming left and right—some of those funds are getting into the business of loaning money to startups. So, the competition has the traditional startup lenders ('venture debt firms') pissed off that these hedge funds are driving down the rates." —Techdirt

Liar's Poker meets Accidental Empires.