4 ms·
Net worth is the more relevant value for a loan guarantee.
by BorisTheBrave 4y ago
Net worth is the more relevant value for a loan guarantee.
- hn_throwaway_99 4y agoBut I'd assume a huge amount of that net worth is due to Better.com's valuation. Valuation is, of course, just the amount the most recent investors paid for their shares, times the total number of shares. And those most recent investors include Softbank, who also gave the founder the loan. Seems like a pretty scary loop.
- reitzensteinm 4y agoIf Better can't itself afford to pay the loan back, bringing the personal guarantee into play, what value will the equity have? Net worth is an abstraction that's generally useful to reason about outcomes, but it's a leaky abstraction.
- _fat_santa 4y agoOne would assume Softbank made sure that the debt was collateralized with something other than Better.com shares. I'm sure a good chunk of that 750M is collateralized with better.com shares but I'd be willing to bet they made him put some other stock/investments on the line.
- jmvoodoo 4y agoIf softbank believes in Better, but not necessarily in Garg, then having him personally guarantee the loan against his own shares is an easy way to push him out cleanly if things go south.
- cyanydeez 4y agoUnless that loan underpins the value