If I sell my company for $1T, but I financed $999B of it, should I expect to get a payout? Financing generally requires interest. Seems like the headline is trying to invoke outrage.
IDK FanDuel structure (not in article), but they only raised ~ 400M. Yet the investors got every dime up to 550+M.
It might be a reasonable reflection of your pre-money worth (i.e. near zero) or it might not be.
1x non participating is a fine way to offset some risk.
Anything more than that is greed.
We're talking a $1G company financing $333M and getting nothing.
I did read the article. I even went back a looked again. I see no mention of interest rate for the FanDuel deal.
"company financing $333M"
So if you're saying they financed this amount, there's no way they're subject to 100% interest if the investors get up to approximately $550M. Not to mention this investment timeframe covers years. I don't have the timeframe. What was the actual rate of return? I'm guessing low to mid single digits. Why would an investor put money into something so high risk for so little money when they could just put it in safer assets with higher return?
It sounds like you're angry they got nothing because you're only looking at it from the founder perspective. They agreed to the terms.