Do Startups Often Float Bonds?
There are a couple of bond/debt-financing options I’ve seen.
1. Venture Debt. Firms such as TriplePoint Capital offer debt financing to startups, usually to buy servers, chairs and other capital assets (that they could later foreclose on if necessary). YouTube and Facebook both did deals with TriplePoint, but these companies were already well established when they executed a less-expensive option for growth capital.
2. Founder-financing. A well-to-do founder, presumably wealthy from a previously successful startup, could loan his next startup money and set the terms for the loan himself. The startup (his startup) would then pay him a coupon on the bond and eventually pay him back the principle. Meanwhile, he could use the money to keep from having to raise venture capital and diluting his own ownership stake. This is pretty complicated and you’d need some good lawyers to figure out the details.