> why is it like this
In part it is like this because they've already borrowed so much.
In part it is like this because they've already borrowed so much.
Investment isn't debt.
That's what is driving up the cost of debt and teetering some of these companies into junk status.
No they don't.
A company has legal obligation to pay loans at the agreed rates.
There is legal obligation that defines rates of return beyond "acting in shareholder interest" (and OpenAI is a public benefit corporation so even this is reduced).
Because it's an investment it is risk capital. They won't be happy if they don't get a return but their return is part ownership in the company, not a legal contract giving an income stream.
If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.
Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either.
No.
> If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.
A person might get replaced as CEO but the company has no financial obligation to the investors.
A loan means the company does.
Legally they are dramatically different.
There just isn’t a sane way to look at this as “investment”