(2013-10-30) Kickstarter Nonexit Payback

In a Fred Wilson post about KickStarter, the question came up about how to pay back (VC) investors if there's no M And A and no Liquidity Event (IPO). Fred said: secondary transactions and cash payouts are two of the most obvious options.

I Commented that: Secondary Transaction-s just seem like "kicking the can down the road". (How does the buyer in the secondary get their money out?)

Kalen Stewart responded: if the company is rolling over cash flow, ReCap-ping with debt is a reasonable way to take the VC out

So I responded: I threw together a crummy spreadsheet leading me to estimate that, to pay back $40M for the $10M funding, KS would need to be generating $6.5M/yr in (before-interest) profit. (To be able to pay the interest on the ReCap debt.)


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